OSFI Proposes New Stress-Test for Uninsured Mortgages

The new proposal for the qualifying rate for uninsured mortgages is the higher of 5.25%, or the mortgage contract rate +2%. This is an increase from the current stress-test of 4.79%.

Increasing the stress-test specifically on uninsured mortgages will affect homebuyers purchasing with a 20% down-payment by decreasing their lending limit. It is also expected to put negative pressure on housing prices, primarily on homes above $1-million.

In Vancouver, assuming a client is earning $100k annually, their lending limits would decrease from approximately $560k to $528k on a 30-yr mortgage.

OFSI is seeking input from interested stakeholders on this proposed qualifying rate by email to b.20@osfi-bsif.gc.ca before May 7, 2021.

OFSI will communicate final amendments to the qualifying rate for uninsured mortgages by May 24,2021 with a coming into force date of June 1, 2021.