Canada's Top Banking Regulator Is Raising The Mortgage Stress Test Level To 5.25% | Stress Test

🔶Bank regulator raises mortgage stress test level, making it harder to qualify for home loan.
🏦 OSFI was considering changes in early 2020 before shelving them during COVID-19

Canada's top banking regulator is raising the mortgage stress test level to 5.25 per cent or two percentage points above the market rate, whichever is higher.

This change by the Office of the Superintendent of Financial Institutions (OSFI) means borrowers will need to prove that their finances can pay for the loan at that higher rate, regardless of what a lender is willing to lend them. This would make it harder to qualify for a home loan, shrinking the pool of qualified borrowers and ultimately bringing down some of the upward pressure on house prices in the country.

That's a hike from 4.79 per cent, which is the current average posted rate at Canada's biggest lenders.

This measure will potentially decrease the purchase power of home buyers by 5%. For example, now, if a buyer can afford to buy a home for $500,000 after this rule the buyer will be qualified for only $475,000 with same income.

Ishtiaq Ahmed Realtor
Century 21 Innovative Realty Inc. Brokerage
Ph: 416-999-6975
www.iwillsell.ca