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Did you hear about the stress test?

Posted by Leo Bruneau on Friday, November 10th, 2017 at 1:51pm.

The Office of the Superintendent of Financial Institutions Canada (OSFI) has introduced new rules for the stress test beginning January 1, 2018. Canadian home buyers now have to meet stricter guidelines in order to qualify for a mortgage. It was confirmed just last month that starting next year, all borrowers will need to qualify for mortgages that are 2% higher than the rates at which they are applying.

What is the stress test?

Under the OSFI's new rules, borrowers would be stress tested at either the five-year average posted rate, or two per cent higher than their actual mortgage rate. The stress test is a way of determining how much a borrower can actually afford and under what circumstances. For example, the stress test considers whether you could still afford to pay mortgage if the interest rates go up. And what if you experience a job loss or face unforeseen expenses, could you still make mortgage? The stress test rules won't apply to mortgage renewals as long as the borrower remains with their existing lender.

What does this mean for Canadian home buyers?

The rules were created as a way to lower the risks for households that have high levels of indebtedness. This could help protect households as interest rates continue to rise. This may lower the risks in the long-term, but could potentially change the way of the current market. Give Team Leo a call at (604) 936-1111 or email at to learn more about the new stress test.

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