Market Update: Stress Test

As some of you might be aware, Canada’s Top Banking Regulator is proposing to raise the mortgage stress test level to 5.25 % or two percentage points above the market rate- (whichever is higher). Currently, the stress test is at 4.79 %.

So you’re probably wondering…How does this affect me when buying, selling, or investing in a home? We spoke to our RBC Mobile Mortgage (Ottawa) Specialist Pat Kavanagh, and here’s what he had to say:

“As I am sure you have heard, Canada’s banking regulator has proposed changes that would strengthen the stress test applied to uninsured mortgages which would require borrowers applying for uninsured mortgages—typically those with more than a 20% down payment—to qualify at their mortgage contract rate plus two percentage points or 5.25%, whichever is higher. That is up from the current stress text of 4.79%.  It’s estimated that this proposal would reduce purchasing power for uninsured borrowers by between 4% and 4.5%.  Since mortgage rates are at or near all-time lows, this will help protect buyers from an increase in mortgage rates when they have to renew their mortgage.  Buying a house and securing a mortgage approval can be stressful,  feel free to reach out to me for a pre-approval and to answer any questions you may have”.

The Office of the Superintendent of Financial Institutions will add any final amendments to the qualifying rate by May 24, 2021, prior to the new stress test taking effect on June 1, 2021.

 With the market continuously shifting, if you have any questions about the current market and want to know if now is the right time to Buy, Sell or Invest, Contact Us Today!  We are always happy to help!

Chairman's Team Award


Chairman's Team Award & Platinum Status


Diamond Award Team


Platinum Status


2020 Chairmans Team


2017-2019 Platinum Club


2016 top 100 Club Team


2015 Executive Club Team