Nation-wide Stress Test for uninsured mortgages

By Ralph Fox

As of Jan.1, 2018 there will be a nation-wide stress test that demands a new minimum qualifying rate for uninsured mortgages – those with a deposit of 20 per cent or more. The guideline requires federally regulated financial institutions to vet applicants for all uninsured mortgages using a minimum qualifying rate equal to or greater than the five-year benchmark rate published by the Bank of Canada or their contractual mortgage rate plus two percentage points.
This announcement, by superintendent Jeremy Rudin of the Office of the Superintendent of Financial Institutions (OSFI), argues that the stress test is needed to reduce the risks associated with high household debt across the country because of “frothy housing markets” in Vancouver and Toronto.

There have been countless attempts in the last five years from multiple levels of governments to slow pricing in these markets. In the past, these new measures have only proven to adversely affect the housing market and curtail already restricting inventory levels.

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