NEW Stress Test Rules – June 1, 2021

I wanted to share this announcement with you. You will most likely read a lot about the new mortgage stress test rules coming into effect. If you are considering a mortgage, let’s talk right away!

Announcement issued by Mortgage Professionals Canada

Ministry of Finance follows OSFI’s uninsured mortgage announcement with heightened stress test for insured mortgages also effective June 1st.

This afternoon, at approximately 1pm, the Office of the Superintendent of Financial Institutions announced the result of its consultation regarding the uninsured mortgage stress test found in B20. As of June 1st, uninsured mortgages must qualify at the greater of a 5.25% interest rate or the contract rate plus 2%. You can read the formal announcement here

Following closely thereafter, 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

While not surprised by the announcement, we are disappointed the Minister decided to move so quickly. Given the traditional audience for insured mortgages, namely young aspiring middle-class families, single individuals, and the recently separated, all owner occupiers of the properties they purchase, MPC would have preferred the insured qualification rate had not been increased in the interest of this community; those without access to family assistance or a bank of mom and dad to help with a down payment. Given the rapid rise in prices, making qualification more stringent now will disqualify many of the Canadians the government has promised to support. Since the First Time Home Buyers Incentive program also requires an insured mortgage qualification for borrowers to be eligible, the existence of this program, even with the increased limits, will do nothing to help these newly disqualified buyers. 

You can read our position and arguments to OSFI and Finance in our consultation submission here.

MPC will continue its dialogue with the Ministry of Finance and related agencies and keep you informed of any further developments. 

From my perspective, this is not the best news we could have hoped for. However, I am committed to continuing to help you qualify. It will be more difficult for some but let’s work through it by working together early on to set you up for success.

Schedule a call with me – click here.