Proposed Changes to the Stress Test

Apr 29, 2021

Recently, there have been proposed changes to the stress test released by the government that would come into effect on June 1st. If the changes go into effect, the Bank of Canada benchmark qualifying rate will increase to 5.25%. 

If the changes go into effect, it will be for uninsurable mortgages only. Uninsurable mortgages are any mortgages that

  • Have a 30-year amortization
  • Is a rental
  • Is a refinance
  • The mortgage is over $1 million

If the mortgage is insured or insurable, then everything will be the same.

When looking at borrowing power, these changes will create a 5% decrease in borrowing power. This would amount to $5,000 less for every $100,000 borrow.

Although this will create a shift in your buying power, it will not be as high as we have seen in the past. The average Bank of Canada benchmark qualifying rate over the last three decades has been 5.82%. 

If you think these new changes will affect you, and a real estate purchase and/or refinance of your existing home is part of your short-term plan, then consider calling us and start the process of locking in your rate.

A decision will be made on May 24th as to whether these proposed changes will go into effect.  Stay tuned to our social media outlets as we will provide an update on May 24th on whether these changes will be happening.

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