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