For people who are not familiar with the mortgage “Stress Test”, this is a new mortgage rule which came into effect in January 2018 and it is designed to ensure that borrowers can afford their mortgage payments even if interest rates increase.
Simply explained, lenders now need to qualify you at the greater of the Bank of Canada’s five-year benchmark rate, currently 5.34% or a rate 2% higher than the rate offered to you.
Most people (including media) have interpreted that the “Stress Test” only applies to first time home buyers and “move-up” purchasers, which is not totally true. In reality, no matter what you need your mortgage for – first time home purchase, moving to a larger home, refinancing or renewing, you will be affected by the new “Stress Test”. Watch this week episode to learn more facts about the mortgage “Stress Test”! Enjoy the show.