April 6th,2020 Stress test Rule Changes Canadian Mortgages

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April 6th,2020 Stress test Rule Changes Canadian Mortgages
STRESS TEST RULE CHANGES

The stress test is only for insured mortgages,
but there is talk about it extending to conventional mortgages.

The mortgage qualifying rate will be the median of the big banks’
median insured 5yr rate plus 2% now.
As of Apr 6, this rate goes to 4.89% from 5.19%.

The .3% rate drop increases borrowing power by about 3%.
So, for example, someone who qualified for $500,000
would now qualify for about $515,000.

This follows a recent review by federal financial agencies
which concluded that the minimum qualifying rate should
be more dynamic to better reflect the evolution of the market.