Stress Test Rates Drop Again!

While the stress test does still make it more difficult than it used to be to get a mortgage, things are going in the right direction with the latest qualifying rate drop.

Interest rates have been going lower and lower over the past few months, and thankfully with that the stress test has also been decreasing. 

Five year posted mortgage rates have been coming down in recent weeks and are now down to 4.79%.  Keep in mind that this is just the posted rate and not what you will actually be paying, als known as the "Advertised Discount Rate" CLICK HERE TO READ MORE ABOUT THE DIFFERENCE

The Posted rate dropping to 4.79% is important to note, as this is the rate that the stress test is actually based on. The stress test, which was first introduced at the beginning of 2018, was created in order to make sure that buyers would not be over extending their financial situation in case interest rates were to rise. Obviously the opposite has happened there has certainly been more downsides about the stress test than there have been positives. The stress test itself impacted first time buyers more significantly than any other category of buyers in an already high priced market, essentially pricing some buyers out of the market altogether, as well as fuelling an unprecedented price spike in late 2017 as buyers panicked to get into a home prior to their borrowing potential being depleted.

While the new change is not significant when it comes to the amount a buyer will qualify for, it is certainly a step in the right direction.

For more detailed information on the changes, check out the following articles:

https://www.canadianmortgagetrends.com/2020/08/stress-test-rate-to-fall-to-4-79/

https://www.cbc.ca/news/business/mortgage-stress-test-1.5684685