The way Canadians qualify for a mortgage is changing; known as the ‘stress test,’ it may cause more stress as it will be harder to obtain a residential mortgage.
Mortgage Professionals Canada | May 20, 2021 – 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: Amendments to the minimum qualifying rate for uninsured mortgages
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: Statement by the Deputy Prime Minister and Minister of Finance on the Canadian housing market
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.
If you are interested in knowing our position to this breaking news as your local Edmonton Mortgage Brokers and that of Mortgage Professionals Canada to OSFI and Finance, you can read more in the consultation submission here: Re: April 8, 2021 Consultation – “OSFI proposes new minimum qualifying rate for uninsured mortgages”
Mortgage Professionals Canada will continue its dialogue with the Ministry of Finance and related agencies and keep you informed of any further developments.
Source: Mortgage Professionals Canada
Source: Department of Finance Canada
About Mortgage Professionals Canada
Mortgage Professionals Canada is a non-profit, national mortgage industry association representing 11,500 individuals and 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers. Our members make up the largest and most respected network of mortgage professionals in the country whose interests we represent to government, regulators, media and consumers.
The mortgage broker channel originates more than 35% of all mortgages in Canada and 55% for first-time buyers, representing approximately $80 billion dollars in annual economic activity. With this diverse and strong membership, we are uniquely positioned to speak to issues impacting all aspects of the mortgage origination process.
The mortgage broker channel is a critical and valuable profession. It creates possibility, fuels the economy and provides Canadians with choice when making the most important financial decisions of their lives.
Benchmark Mortgages Inc. is an Edmonton brokerage designed to establish meaningful long-term relationships with clients and help them achieve financial freedom faster with diverse and customized mortgage options. The term “benchmark” originates from the chiseled horizontal marks that surveyors made in stone structures as an established point of reference. By definition, it is a mark that serves as a standard by which others may be judged or measured.