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Stress Test

What does it mean for your mortgage?

The bar was just brought a lot higher for everyone, affecting both the purchasing power of entry-level buyers hoping to get into the housing market and existing homeowners looking to refinance or renew. Homebuyers need to qualify for their mortgage contract rate plus 2% (or the average bank 5-year posted rate, whichever is higher.) By stressing your mortgage in advance, the government can ensure that when interests rates rise, you’ll still be able to handle the loan you’ve borrowed from to own a home.

 

How does it impact everyone?

It impacts affordability – qualifying borrowers at higher rates will reduce the amount they’re able to borrow – and mortgage financing approvals – affecting purchasing power by 20-25% with the potential to eliminate entry-level buyers. The new stress test impacts both insured and uninsured mortgages.

 

Who has to implement the stress test?

The new regulations impact all six of Canada’s big banks with some provincial lenders voluntarily complying the with the new rules, including MonsterMortgage.ca.

 

So, who can help?

That’s where we come in. Navigating the new rules is what we do every day. Give us a call and we’ll walk you through it.