Stress Test Continues; Was Almost Abolished
Yes, the Stress Test was almost done away with but it continues.
It seems to be a good thing that all the mortgages since 2018 have been “stress tested” at 5.25%. Now that we are in the middle of 3.6 million mortgages renewing over an 18 month period we find that most everyone is able to make their new mortgage payments after renewal.
Mortgage Mark Herman, MBA in Finance and 22 years experience as a mortgage broker in Western Canada
Nerd alert here!!
OSFI has also determined that loan-to-income (LTI) limits on each institution’s mortgage portfolio will remain in place, alongside the existing stress test.
LTI limits have been in place since each institution’s 2025 fiscal year start and are reported on a quarterly basis.
This is a limit on the volume of newly originated uninsured mortgage loans, at that financial institution, that exceed a 4.5x loan-to-income multiple. This is not a limit on each individual loan.
This measure was introduced in an effort to lessen the build-up of highly leveraged residential mortgage borrowers.
Background
Canada’s federal mortgage stress test began on January 1, 2018, when the Office of the Superintendent of Financial Institutions (OSFI) introduced it for uninsured mortgages.
Key Details of the Stress Test
- Introduced: January 1, 2018
- Regulator: OSFI (Office of the Superintendent of Financial Institutions)
- Applies to: Uninsured mortgages (20%+ down payment) at federally regulated lenders
- Purpose: Ensure borrowers can afford payments at a higher qualifying rate than their contract rate
Buying a Home with a Basement Suite – Some Details
Buying a home with a basement suite can be a powerful way to increase affordability, improve cash flow, and build long-term wealth — but not all suites (or lenders) are treated the same. If you’re considering a home with a suite, here are four important things to think about before you buy.
1) The type of suite matters.
If a suite is legal (fully permitted and meets municipal bylaws), all lenders will accept the rental income for qualification. If it’s not legal, make sure it’s at least fully self-contained, meaning it has its own entrance, its own kitchen, and its own bathroom. Many lenders will still consider rental income from these types of suites, but not all.
2) Your lender choice can change how much you qualify for.
Different lenders treat rental income very differently. Some will only allow 50% of the rental income to be used, while others allow up to 100%. Some lenders make you debt-service property taxes and heat, while others do not. These differences can have a huge impact on your approval amount, which is why working with a broker who understands rental income policy is so important.
3) Whether the suite is already rented or not DOES matter.
If the suite is currently rented, you should obtain a copy of the lease, make sure the purchase contract clearly states that the tenant is staying, and ensure the monthly rent amount is documented. If the suite is not already rented when you purchase the home, lenders will typically require an appraisal to confirm market rent. It’s very important to be conservative about what you expect the suite to rent for — especially if that rental income is crucial to comfortably affording the home.
What about adding a basement suite OR Mother-in-Law suite to the home I am buying?
Great idea, adding a suite to the home that you are buying AND at the same time, using the expected rental income from that same suite to qualify for the mortgage IS possible. There are a few lenders that allow this to happen and we do deals like this all the time. (No shortcuts though, as the final step is a final inspection and also providing the lender a copy of the occupancy permit from the City before the funds can be released.
Obviously there are some details involved but adding a suite and using the expected rental income to qualify for the mortgage is a huge helper for buyers looking to push a bit higher and get a “mortgage helper.”
Mortgage Mark Herman, 1st time home buying mortgage specialist
Variable Rate or Fixed Rate for Renewals in 2026?
Here is what a math-based, mortgage broker with 21 years of experience and an MBA in finance looks at when deciding what to do for my own mortgage renewal.
This is a super common question as there are still 1,800,000 Canadian mortgage renewals to come before summer 2027, with the same 1.8M renewals completed since 2025.
Numbers at the top, words at the bottom.
Numbers
Variable Rate in 2024 = 6.20%
(Prime – .90% = 7.2% – .9% = 6.2% rate.)
-2.75% rate drops = 3.45% today, Jan 2026.
Variable Rate in 2026 = 3.75% today
(Prime – .70% = 4.45% – .7% = 3.75% rate.)
No rate drops expected, 2x .25% increases expected = 3.75% + .5 = 4.25% by the end of 2026.
Continued instability will lead to more rate increases later.
5-year Fixed Rates
5.09% in 2024
4.24% today – 2026
Analysis
Variable wins by .5% today, but fully expect 2 x o.25% increase in 2026 to make the rate the same as fixed rates are today, Jan 2026.
Fixed rates are now, and will continue to slowly rise, as Trump policy is highly inflationary.
If you take a variable now, and then go to lock it in later, when variable rates / prime rates start to increase, the rate you lock in at will be higher than today.
Summary
Rates look to have bottomed out right now, from looking many data points.
Fixed rates are ½% higher than the variable rates today – Jan 2026.
Then what? In 2024 I was able to precisely layout the next 18 months and predicted every rate increase exactly as it played out. Right now it is not possible to guess what will happen next month so Variable has higher risk and will probably pay more later as the rates increase as expected.
200 Word Summary
Canada’s variable-rate mortgage borrowers have enjoyed significant relief since the Bank of Canada (BoC) began cutting interest rates in 2024, but that momentum is expected to slow—and probably reverse – in 2026.
The BoC delivered 2.75% of rate cuts through 2024–2025, bringing the policy rate down to 2.25%. This helped push insured variable mortgage rates below 4%, down from around 7% in mid-2024.
However, the BoC now views inflation risks as too elevated to justify further cuts, and rate relief for variable-rate borrowers is “mostly behind us.”
The bank’s baseline forecast suggests the BoC’s policy rate could rise back toward its long-term neutral level of 2.75%, which would push variable mortgage rates up by roughly 0.5% in 2026, with additional increases probable in 2027.
Meanwhile, fixed mortgage rates have fallen less dramatically because they are tied to longer-term bond yields, which rebounded in late 2025. Borrowers have increasingly favored 3-year fixed and 5-year fixed terms, anticipating improved renewal conditions ahead when they renew later.
Bottom line: 2026 could prove challenging for variable-rate borrowers. The era of large variable-rate relief seems to be ending, and 2026 may test borrowers who relied on those lower rates — especially if the BoC keeps rates steady or reverses course
Looking at all of this, in March, I will be renewing into the 5-year fixed so I can sleep at night.
Mortgage Mark Herman, MBA, Top Calgary mortgage broker for 21 years.
5 Car Loan Strategies That Can Boost Your Mortgage Approval — An MBA-Level Approach
Top 5 Car Loan Strategies We Used for Mortgage Clients in 2025
In today’s mortgage landscape, qualification isn’t just about income and credit—it’s about strategic debt management. With an MBA in Finance and 21 years in the industry, I approach mortgage qualification the same way I would evaluate a business balance sheet: identify inefficiencies, reduce liabilities, and optimize cash flow.
One of the most overlooked opportunities to a mortgage approval is your auto loan.
Car loan rates now at their lowest point in nearly five years—6.25% to 6.99%—the math has never worked better.Mortgage Mark Herman; Best Mortgage Broker for New Home Buyers in Calgary, Alberta.
Most clients are seeing sizeable reductions in their monthly payments, which directly improves affordability ratios and increases borrowing capacity. In other words, small changes on the car side can create big changes on the mortgage side.
Why Auto Loan Optimization Matters
Mortgage lenders don’t qualify you based on total debt—they focus on monthly obligations. So even if your auto loan balance is reasonable, the payment itself may be restricting your mortgage approval.
From a financial efficiency standpoint, this is low-hanging fruit. Reducing or restructuring this one line item can dramatically shift your debt-to-income (DTI) ratio and unlock far greater mortgage purchasing power.
Top 5 Car Loan Strategies We Used for Mortgage Clients in 2025
1. Commercial Auto Loans for the Self-Employed
By shifting the vehicle loan from personal to business liability, we remove the payment entirely from your mortgage ratios. This is financial restructuring 101—use the proper balance sheet for the proper asset.
2. Auto Loan Payment Reductions
With today’s lower rates and extended terms (up to 96 months on newer models), most clients see substantial monthly reductions.
This isn’t about stretching debt—it’s about reallocating cash flow to where it has the highest ROI: qualifying for a home.
3. Cash-Back Refinancing
Lower the payment and pull out equity from your vehicle.
This can fill down payment gaps or pay off high-interest debt—another strategic reshuffling of resources to strengthen your mortgage file.
4. “Free and Clear” Mortgage-First Strategy
Sometimes paying off a car is required to get a mortgage approved.
The sophisticated move? Refinance the vehicle after closing and reimburse yourself. You maintain mortgage eligibility and preserve liquidity—exactly the type of sequencing we analyze in financial planning.
5. Co-Signer Removal
If you’ve co-signed for someone else, you’re carrying a liability without receiving the benefit.
Removing yourself restores borrowing capacity and aligns your financial profile with your actual obligations.
The Bottom Line
Your auto loan isn’t just a monthly payment—it’s a strategic lever in your overall financial picture. By applying an analytical, MBA-driven approach to debt optimization, we can often increase mortgage qualification dramatically without changing income or credit.
If you’re planning to buy a home this year, let’s look at your auto loan the way a CFO looks at a balance sheet:
Find the inefficiencies, optimize the structure, and unlock the capacity you didn’t know you had.
The Bank of Canada maintains interest rate policy to end 2025
The Bank of Canada announced today that it is keeping its benchmark interest rate at 2.25%. This hold-the-line approach reflects the Bank’s expert interpretation of macroeconomic data.
We summarize the Bank’s observations and its outlook below.
Know this, fixed rates are trending up due to multiple factors, but mostly long term government debts, especially in the USA.
Now is a great time to buy while prices are soft, there are lots of listings, and rates are around the 4% mark
Mortgage Mark Herman, MBA; 1st time home buying specialist, and move-up mortgage broker
Canadian Economic Performance and Near-Term Outlook
- The Canadian economy grew by a “surprisingly” strong 2.6% in the third quarter, even as final domestic demand was flat
- The BoC notes that the increase in GDP largely reflected volatility in trade
- The Bank expects final domestic demand will grow in the fourth quarter, but with an anticipated decline in net exports, GDP will likely be “weak”
- Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility
Canadian Labor Market
- Canada’s labour market is showing “some signs” of improvement
- Employment has shown solid gains in the past three months and the unemployment rate declined to 6.5% in November
- Nevertheless, job markets in trade-sensitive sectors remain weak and economy-wide hiring intentions continue to be subdued
Canadian Inflation and Outlook
- Inflation measured by the Consumer Price Index (CPI) slowed to 2.2% in October, as gasoline prices fell and food prices rose more slowly
- CPI inflation has been close to the Bank’s 2% target for more than a year, while measures of core inflation remain in the range of 2.5% to 3%
- The Bank assesses that underlying inflation is still around 2.5%
- In the near term, CPI inflation is likely to be higher due to the effects of last year’s GST/HST holiday on the prices of some goods and services
- Looking through this “choppiness,” the Bank expects ongoing economic slack to roughly offset cost pressures associated with the “reconfiguration” of trade, keeping CPI inflation close to the 2% target
Global Economic Performance
- Major economies around the world continue to show resilience to US trade protectionism, but uncertainty is still high
- In the United States, economic growth is being supported by strong consumption and a surge in AI investment
- The US government shutdown caused volatility in quarterly growth and delayed the release of some key economic data
- Tariffs are causing some upward pressure on US inflation
- In the euro area, economic growth has been stronger than expected, with the services sector showing particular resilience
- In China, soft domestic demand, including more weakness in the housing market, is weighing on growth
- Global financial conditions, oil prices, and the Canadian dollar are all “roughly unchanged” since the Bank’s Monetary Policy Report in October
Outlook
The Bank offers that if inflation and economic activity evolve broadly in line with its October projection, it sees its current policy interest rate “at about the right level” to keep inflation close to 2% while helping the economy through this period of structural adjustment.
However, the Bank also says that if uncertainty remains elevated and its outlook changes, “we are prepared to respond.”
Mortgage Renewals – 2.75 million Canadian Mortgage Renewals Before 2028!!
Mortgage Stress Test: Why It’s Protecting Homeowners Ahead of the 2026 Renewal Wave
If you locked in your mortgage around 2% five years ago, you probably remember grumbling about the federal “stress test.” At the time, qualifying at 5.25% felt unnecessary — almost punitive. Fast forward to today, and that very safeguard is proving to be one of the smartest policies in Canadian housing finance.
The Renewal Wave Is Coming
According to the latest CMHC report, Canada is heading into a busy period of mortgage renewals:
- 750,000 mortgages will renew in the second half of 2025
- Over 1 million more in 2026
- 940,000 in 2027
Even though the Bank of Canada has cut rates nine times since its peak tightening cycle, borrowing costs remain much higher than they were during the pandemic lows. In fact, the average five-year fixed uninsured mortgage rate in July 2025 was still 67% higher than five years earlier.
“Banks are ready for the almost 3 million mortgage renewals before 2028. Lets get you a strategy on how to get the best rates on your renewal. Its a quick 10 minute phone call and we usually send you back to your own bank with the data you need to get a better rate from them OR we can move you to a bank that does get you better rates.”
Mortgage Mark Herman, Top Calgary Mortgage Broker for renewal advice
Stress Test Success
Here’s the good news: borrowers who qualified at 5.25% back in 2020 are now proving resilient. The stress test ensured they could handle payments at rates much higher than what they actually received. That foresight is paying off:
- National mortgage delinquency rates fell in Q2 2025 — the first decline since 2022.
- While Ontario and BC saw arrears climb (reflecting higher property values and loan sizes), the overall system is holding steady.
- Fears of a “renewal cliff” have eased, thanks to both the stress test and recent rate cuts.
What This Means for You
If your mortgage is coming up for renewal in 2026, now is the time to plan. Options like refinancing, adjusting amortization, or exploring different products can help smooth the transition. The stress test gave you a buffer — but proactive planning will maximize your financial flexibility.
Call to Action: If your mortgage is set to renew in the next 12–18 months, let’s talk strategy. As a mortgage broker, I specialize in helping clients navigate renewals, refinances, and complex lending scenarios. Call me today to review your options and make sure you’re ready for what’s ahead.
Reverse Mortgage Specials: October 2025
The reverse mortgage market is surging yet remains undeserved by brokers that dabble in this product.
We have been doing Reverse Mortgages since 2005, and also did the largest Reverse Mortgage ever at the time (in 2014) for $720,000!!
With millions of Canadians approaching retirement and facing a savings shortfall, now’s the time to look into REVERSE MORTGAGE Options.
Mortgage Mark Herman, expert in Canadian Reverse Mortgages
The Numbers
3M
Canadian households retiring in the next 10 years
$1M
What most Canadians believe they need to retire
$272K
Average retirement savings for Canadians 65+
That’s a $728K gap—and reverse mortgages can help close it.
Right now 2 of the 3 big lenders have a special on.
- Available in AB, BC, ON, QC
- We’ll beat any posted rate for comparable reverse mortgages
HIGHLIGHTS of these lenders and their reverse mortgages:
- Tax-free cash for:
- Paying off an existing mortgage
- Debt consolidation
- Health care & renovations
- Living inheritance & gifts
- No monthly payments required
- No impact on federal retirement benefits
- 100% home ownership retained⁶
- Preserve investments & legacy while aging in place
Ready to start the conversation?
Reach out today to discover how reverse mortgages can grow your business—and help your clients thrive.
Reach me direct at 403- six81- 437six
I answer from 9-9 x 365.
Summary: RE/MAX Canada Fall 2025 Housing Market Outlook
“54% of Canadians believe this fall is a good time to strike a deal on a home.”
Here’s a summary of the RE/MAX Canada Fall 2025 Housing Market Outlook piece, released Sept 21st:
- Pricing Trends: Residential price trends varied regionally, rising across Atlantic Canada and the Prairies, while declining in major urban centres in Ontario and British Columbia.
- National average home prices are expected to decrease by about 6.5% this fall.
- 68% of Canadians say a five- to 10-per-cent drop in property prices would make a meaningful difference in their ability to enter the market.
- Sales Activity: Home sales declined year-over-year in 62% of markets analyzed between January 1 and July 31, 2025.
- Buyer Optimism:
- 38.2% of housing markets are sitting firmly in buyer’s territory this Fall.
- 7% of Canadians say they intend to buy their first home within the next 12 months.
- 28% of Canadians planning to buy their first home in the next 12 months say they have saved at least 20 per cent for their down payment.
- 64% of Canadians say they’d feel ready if interest rates fell by 0.5 to one per cent.
- Seller Market:
- 26.4% of housing markets are expected to favour sellers this Fall.
- 8% of Canadians say they plan to sell their home in the next year, and among them, confidence is strong.
- 63% of those planning to sell believe they’ll be able to secure their asking price.
- Homeowner Sentiments:
- 92% of Canadian homeowners see their homes as a solid long-term investment.
Click here to read the full report!
Now is the perfect time to buy a home in Alberta as it is a solid BUYERS MARKET!
Mortgage Mark Herman, best first time home buying mortgage broker in Calgary Alberta
Or call me for a chat at your convenience.
Mortgage Mark Herman
#1 Mortgage Rate SPECIAL in Canada ⚡
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Insured Refinance when funds are used to build a legal suite!
What if your home could help pay for itself?
We have an exclusive lending program that allows homeowners to refinance their mortgage and add a legal rental suite—all in one step.
Here’s why this is a game-changer:
- ✅ Borrow against your home’s future value (“as improved value”)
- ✅ Finance up to 90% of the as-improved value (maximum $2M)
- ✅ Rental income from the new suite can be used to help qualify
- ✅ Options for up to a 30-year amortization to keep payments affordable
- ✅ Consolidate existing debt into your new insured mortgage
This program is designed specifically to help Canadians:
- Convert underutilized space into a legal rental suite
- Boost property value while creating a new income stream
- Contribute to housing availability in the community
Because this is a specialized product, it’s not available everywhere—only through select mortgage professionals like me.
If you’ve been considering adding a suite to your home, this could be the perfect time.
Call to learn how this program can work for you.
Its true, you can GET BEST RATES when you refinance / remortgage and use the funds to build a suite
This is the best way to put your home to work for you.
Mortgage Mark Herman, Best Calgary mortgage broker specializing in refi+renos