The Office of the Superintendent of Financial Institutions (OSFI) Canada recently eliminated the stress test requirement for all mortgage renewals, no matter insured or uninsured. With over 70% of Canadian mortgages being uninsured ones, homeowners can now switch to a different lender to take advantage of a better deal, without feeling stressed about mortgage stress test. Insured mortgages were already free from stress test requirement and now uninsured mortgages are eliminated too.
What is mortgage stress test?
Stress test was first introduced by OSFI in 2016 to add an affordability buffer for mortgage holders and to ensure they can handle payments in case the mortgage rate increases. Federal banks are required to stress test your mortgage application at a minimum rate of 5.25% or at least 2% more than your actual rate.
OSFI finally decided to remove the stress test after witnessing the financial struggles the Canadian homeowners are facing and the current state of the economy.
How elimination of stress test will help mortgage holders?
As per research, OSFI’s restrictive uninsured policy blocked over 10% of switches and the sudden decision of removing the stress test will open up more savings for mortgage holders planning a renewal. Not only this, the change will make the renewal process easier for homeowners and encourage the lenders to offer more competitive deals to borrowers with uninsured rates.
The OSFI added uninsured mortgages to the stress-test criteria in October 2017, which went into full effect in January 2018. Until then, only insured mortgages were subject to stress testing. The government stress test is still needed for all standard mortgage acquisitions. Getting your mortgage renewed at the best rate can help mortgage holders save more at renewal.
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Till date, we have helped hundreds of mortgage clients in getting approved for mortgage renewal in Abbotsford and ensure you can save thousands of dollars with great service, unbiased advice, and a simple mortgage procedure. Not only this, we specialize in first homebuyers mortgage, second mortgages, private mortgages, and mortgage refinancing in Abbotsford. Interested in getting mortgage renewal or transfer? Give us a call today.