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What is the Mortgage stress test?

And is it something to fear?

The Government of Canada changed the mortgage industry with the introduction of new qualifying regulations, commonly called the Stress Test. The stress test has a bit of an “unknown factor” and can make first time home buyers feel unsure if they will qualify and current homeowners uncertain if they should switch lenders at renewal. But with the right information and the right professionals on your team, the stress test is not something to fear.

What the stress test is not

It's NOT a questionnaire
Or a workout
It's definitely NOT a medical Test
No interview panels
Zero public speaking

Most importantly, it's not something to fear or keep you from exploring homeownership options.

What is the Mortgage Stress test?

On a mortgage application, the applicant’s income and debt relate to one another in a “ratio”. There is a maximum ratio allowed and the stress test increases the interest rate used in the ratio. This is to ensure the applicant can afford the mortgage in the future if interest rates increase and to help protect/stabilize the housing market. For insured mortgages (less than 20% down payment), the stress test is currently at 5.19%. For uninsured mortgages (20% or more down payment), it's currently the greater of 5.19% or the contract rate plus 2%. This means even if you’re paying 2.89%, you must qualify as if you’re paying 5.19%.


Great news! As a step in the right direction, in April 2020, the stress test for insured mortgages is changing! It will become the average weekly contract rate plus 2%. Right now, that means roughly 30 basis points less than what it currently is. This opens up a little more buying power! For uninsured mortgages, the Office of the Superintendent of Financial Institutions (OFSI) is currently reviewing the stress test and there could be more changes to come.

Mortgage Professionals Canada (MPC)

I’m a proud member of MPC, a national non-profit mortgage industry association. Our association has over 11,500 individual members and 1000 companies advocating for the Canadian mortgage industry and homeowners. MPC applauds the recent changes to the stress test! But there’s still work to be done. On February 19, I and other members of MPC met with Senate and Members of Parliament in Ottawa to discuss other potential improvements to the stress test and are hopeful that more positive changes are to come.

Meetings with Members of Parliament, Ottawa, February 2020


Your Best Defence

Your best defence for the stress test is to be informed and work with a Mortgage Broker (like myself!) who has several lender options and is up to speed on the changes so they can be your advocate in the home buying process. Plus, having a thorough preapproval will help take the "stress" out of the stress test.

I always have time for your questions, contact me today toll-free across Canada at 1-844-315-6609.

Sarah Nixon-Miller
Mortgage Broker