09/27/2024
OSFI Mortgage Stress Test Change
Effective November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) will eliminate the requirement for lenders to apply the Minimum Qualifying Rate (MQR) to straight switches of uninsured mortgages. This change applies to borrowers with uninsured mortgages (those with a down payment of 20% or more) who switch lenders while maintaining the same loan amount and amortization schedule.
Background
The mortgage stress test was introduced in January 2018 as part of OSFI’s B-20 Guideline to ensure borrowers could afford their mortgages in the event of potential future rate increases. The test required borrowers to qualify at the higher of the Bank of Canada’s five-year benchmark rate or their mortgage rate plus 2%.
Reason for Change
OSFI’s decision to ease the stress test requirements comes after feedback from the industry and Canadians highlighting the imbalance between insured and uninsured mortgagors at the time of mortgage renewal. Data also shows that the risks intended to be addressed by the stress test have not significantly materialized.
Impact For Borrowers
This change will:
* Allow borrowers with uninsured mortgages to switch lenders without undergoing the stress test, giving them greater choice and flexibility
* Increase competition among lenders, providing more options for borrowers
Key Dates
November 21, 2024: The new policy will come into effect, allowing borrowers with uninsured mortgages to switch lenders without undergoing the stress test.
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