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May 21, 2021

New June 1 Stress-Test Mortgage Rules Confirmed

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OFSI confirmed that all Conventional Mortgages with 20% down or more will as of June 1st be stress tested at 5.25%.

The Deputy Prime Minister and Minister of Finance, Chrystia Freeland also issued a statement of her own, announcing the alignment of the insured stress test with the uninsured stress test, also effective June 1st.

The insured mortgage rule change will impact roughly 1 in 5 homeowners who get a new insured mortgage. It will cut their maximum theoretical buying power by over 4%, compared to the current 4.79% stress test rate.

The government will adjust the minimum qualifying rate at least every December, it said. Most likely, the next adjustment will be up if inflation takes rates higher, as expected. That would further restrict credit in 2022.

So what that means is:

  • All Mortgages High-Ratio (less than 20% down payment) and Conventional (or uninsured Mortgages) will be qualified at 5.25% or your mortgage contract rate plus 2% (whichever is higher).
  • As of now all mortgages that are submitted to a lender before June 1st that are live deals (ie a refi or purchase) will still have the old stress test at 4.79%.
  • Purchases closing after June 1st will still have the current stress test of 4.79%.
  • Pre-approvals submitted before June 1st with no purchase as of now we will say they will face the new stress test if the client enters into a purchase and sale agreement after June 1st

You can read the official OSFI statement here

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