New mortgage stress test rules will make it easier to qualify.

For many Canadians, their home is the most important investment they will make in their lifetime. That is why the Government of Canada has introduced measures to help more Canadians achieve their housing needs while also taking measured actions to contain risks in the housing market. A stable and healthy housing market is part of a strong economy, which is vital to building and supporting a strong middle class.


Starting in April, the government will change the rules that cover mortgage lending in a way that should, in the short term at least, make it easier to qualify for a loan to buy a home.


Minister of Finance, Bill Morneau, announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages, also known as the “stress test.”, changes will come into effect on April 6, 2020. The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.


Crown Mortgage and other members of Mortgage Professionals Canada visited parliament to attend the Mortgage Professionals Canada Advocacy day to discuss the new announcement. Paul Taylor, president of Mortgage Professionals Canada, an industry association for mortgage brokers, said even with the new benchmark the stress test will still be too onerous. While it is “very good” that Ottawa is swapping the Bank of Canada’s benchmark mortgage rate for a new standard, he said, his group thinks the test should be set at 0.75 percentage points above the actual mortgage rate, rather than two percentage points.

Pat Dell, Mortgage Broker at Crown Mortgage Services states; “it has been a long road and every little bit helps but we still have a long way to go to make sure everyone is able to own their own home within their ability to qualify. “


Quick facts

  • When a borrower has less than a 20% down payment, lenders are required to obtain government-backed mortgage insurance. The mortgages must comply with the insured mortgage rules set by the Minister of Finance, including the insured minimum qualifying rate.
  • When the borrower has a down payment of 20%, or more, of the sale price, insurance is not required. The minimum qualifying rate for uninsured mortgages is set by OSFI, the independent banking regulator.
  • To help more Canadians access affordable housing that meets their needs, the Government of Canada launched the National Housing Strategy—a 10-year, $55+ billion plan that will build 125,000 new affordable housing units, repair 300,000 others, and reduce chronic homelessness by 50%.
  • In Budget 2019, the federal government took concrete steps to make homeownership more affordable for first-time buyers by implementing a First-Time Home Buyer Incentive and increasing the Registered Retirement Savings Plan withdrawal limit to $35,000 to buy a home.


Sources: https://www.cbc.ca/news/business/mortgage-stress-test-1.5467330
News Release:  https://www.canada.ca/en/department-finance/news/2020/02/minister-morneau-announces-new-benchmark-rate-for-qualifying-insured-mortgages.html?fbclid=IwAR146SNtd1bO9ssz5fTmlkKRBPwS2nUBTJ1KRw79vMO-MgkoT9GbirfAiak


Verico Crown Mortgage Services


Sources: https://www.cbc.ca/news/business/mortgage-stress-test-1.5467330
News Release:  https://www.canada.ca/en/department-finance/news/2020/02/minister-morneau-announces-new-benchmark-rate-for-qualifying-insured-mortgages.html?fbclid=IwAR146SNtd1bO9ssz5fTmlkKRBPwS2nUBTJ1KRw79vMO-MgkoT9GbirfAiak

The Saskatchewan REALTORS® Association (SRA) (SRA) IDX Reciprocity listings are displayed in accordance with SRA's MLS® Data Access Agreement and are copyright of the Saskatchewan REALTORS® Association (SRA).
The above information is from sources deemed reliable but should not be relied upon without independent verification. The information presented here is for general interest only, no guarantees apply.
Trademarks are owned and controlled by the Canadian Real Estate Association (CREA). Used under license.
MLS® System data of the Saskatchewan REALTORS® Association (SRA) displayed on this site is refreshed every 2 hours.