June 1st 2021 New Mortgage Stress Test – What Does It Really Mean?

New Mortgage Stress Test – What Does It Really Mean

On June 1st, 2021 Canada’s federal banking regular made it more difficult to qualify for a mortgage. The stress test went from 4.79% to 5.25%, but what does it mean in purchasing power?

Great question and I will get to that and the most frequently asked questions I receive from my mortgage customers.

Why did the stress test increase?

The stress test increased to help cool the Canadian real estate market. Everywhere you look properties are selling in multiple offer scenarios over the asking price.

Couldn’t the government have raised variable rates instead?

They could have, but, many lending products are tied to the variable rate. Raising the variable rates would have made car loans, certain credit cards and many banking products more costly. By changing the stress test rate only housing was affected.

Discover How To Apply For An Investment Property Mortgages With This Step By Step Guide

How does the new stress test affect purchasing power?

On average from internal calculations the new stress test strips away $5k per every $100k of the purchase price. For example, if you were to purchase at 500k, your new pre-approval amount would be $475k.

How can I minimize the effects of the new stress test?

I have personally found many lenders forget to do not use all the client’s income. This may be because of the lenders they like to work with, or they do not ask the right questions from clients. I recommend doing your pre-approval with LendCity Mortgages. My team and I team can assist you to maximize your pre-approval to get you the best rates at the lender’s we can qualify you with. Visit to get started or call us at 519-960-0370.

The Mortgage Stress Test, With Scott Dillingham