Finance Minister Announces changes to the Stress Test

February 18, 2020 | Posted by: Tania Kalinich

Today, Minister of Finance, Bill Morneau, announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages also commonly know as the dreaded 'Stress Test'.  

Effective April 6, 2020 the new benchmark rate will be the weekly median 5 yr fixed insured mortgage rate plus a two precent buffer.  Currently the benchmark rate is calculated using the posted rates at the Big Six Banks.  This has kept the rate much higher and the new formula will be beneficial for homebuyers. 

For example the current benchmark rate is 5.19%.  However under the changes announced today and based on current rates it would be 4.79%.  This will help more Canadians borrowing power when qualifying for a high ratio mortgage.  

At this time the change is only to a 'high ratio' mortgages which is a purchase with less than 20% as a down payment.  Conventional (20% more in down payment or equity) will remain the same.  

Please click here for more details.

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