Updated: Nov 16, 2022
Proposal to raise stress test from 4.79% to 5.25%
OSFI has proposed a tougher minimum qualifying rate for uninsured mortgages. As planned, it will be the higher of:
the mortgage contract rate plus 2%, or
a 5.25% floor rate
That 5.25% floor is 0.46%-pts higher than the current minimum stress rate of 4.79%. So, for many, it would be harder to get approved for a mortgage than today. But if rates go up, the stress test could actually get easier to pass because then only the increment above the borrower’s actual mortgage rate would apply.
OSFI intends to “revisit the calibration of the qualifying rate at least once a year to ensure it remains appropriate for the risks in the environment.” (OSFI will seemingly be attempting to time the interest rate and/or housing market. Quite a feat!)
“The current Canadian housing market conditions have the potential to put lenders at increased financial risk,” OSFI says.
OSFI is accepting comments on its proposed new mortgage qualifying rate by email to B.email@example.com before May 7, 2021.
OSFI says it “will communicate final amendments to the qualifying rate for uninsured mortgages in Guideline B-20 by May 24, 2021, with a coming into force date of June 1, 2021.”