Mortgages in Canada can be a murky subject – one that we hope to shed some light on with a series of highly informational articles.
Latest News
Have Questions About the New Stress Test Rate? Here Are Some Answers… Feb 22nd
The Department of Finance created shockwaves this week with its announcement that it will be revamping how insured mortgages are stress tested. Now that the dust has settled, here’s a more in-depth look at the implications, as well as some industry reaction. But first, a quick recap of what’s ch.... More »
Real estate may not be sexy, but… Jan 26th
Rental properties are a secure long-term investment. Note the emphasis on “long-term”.
Check out any seven-year period over the past 50 years (anyone who has read this news site knows that I always recommend buying and holding for at least seven years). Property values have almost alway.... More »
Bond Yields Surge, Mortgage Rates Rising in Response + MORE Feb 24th
Canadian bond yields hit their highest level since April in recent days, and a number of lenders have responded by starting to raise some of their mortgage rates. CMLS, MCAP and First National were among the non-bank lenders to increase at least some of their rates, with their broker rates rising 10.... More »
Rate Increases a Concern, but Many Borrowers Say They Can Handle It: RBC + MORE Mar 26th
Rising interest rates is a concern for most mortgage holders, though many feel "well-positioned" to deal with it..... More »
Mortgage insurers clarify qualification rules for VRM applications amid rising rates Jul 22nd
The Bank of Canada's historic 100-bps rate hike last week has led to confusion over how the stress test should be applied to variable rate mortgage applications already in lender pipelines..... More »
The Mortgage Stress Test: What It Means If You’re Buying a Home
– ratesupermarket.ca
It’s been almost a couple of years since the mortgage stress test came into effect. So, we thought it was the perfect time to revisit it and clear up any confusion. The mortgage stress test took effect January 1, 2018, affecting how much mortgage money Canadians are able to borrow towards the purchase of a home.
Let’s look at the mortgage stress test in greater detail and what it means for those planning to buy a home in the coming months.
What’s the Mortgage Stress Test?
Whether you’re buying a home with more or less than 20 percent down, the stress test affects you. Before the new stress test came into effect January 1, 2018, depending on the length of your mortgage term, you might have only had to qualify based on your mortgage rate. However, now everyone is required to pass the stress test in order to get a mortgage.
To pass the stress test, you must be able to prove that you can afford the greater of your mortgage rate plus two percent and the Bank of Canada’s five-year benchmark rate (currently at 5…
