It’s Confirmed! New Mortgage Stress Test Coming June 1st
|Announced today, Canada’s banking watchdog OSFI (Office of the Superintendent of Financial Institutions), will increase the mortgage qualifying Stress Test from 4.79% to 5.25%.|
The change effects Canadians purchasing a home with at least 20% down and for those who are refinancing.
Following OSFI’s announcement, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, issued a statement of her own, announcing the alignment of the insured stress test with the uninsured stress test, also effective June 1st. You can read that statement here.
What Does This Mean For You?
OSFI has changed the qualifying rate for conventional mortgages while the Canadian government has followed suite by matching the stress test change all insured mortgages; home purchase with less than 20% down.
The increase to the mortgage qualifying standards will reduce your loan eligibility by 4%-5%. We believe the impact will me minimal for the majority. First time home buyers, however, will likely experience further difficulty in trying to enter the housing market.
If you have an accepted offer on a home or a mortgage approval dated prior to June 1st, the existing rules will apply. Please confirm with your Mortgage Advisor or lender, if applicable.
Why The Change?
OSFI has said in part “…It is clear that there are a wide range of issues facing homebuyers, including high indebtedness, rapidly rising home prices, housing supply, and competitive bidding…”
The banking regulator believes that the move will add financial security to Canadians should we experience negative economic change.
The official press release from OSFI can be found here.
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