The Office of the Superintendent of Financial Institutions (OSFI) has announced that it is maintaining the minimum qualifying rate for uninsured borrowers (people who put down at least 20% upfront) at the higher of their contract rate plus two percentage points or 5.25%.
The national regulator added that it will “continue to monitor the appropriateness” of its stress test parameters and will make adjustments as needed.
In a separate announcement, the finance department matched OSFI’s decision, saying it would maintain the same minimum qualifying rate for insured borrowers who put down less than 20% up front on the purchase of a house, which is a segment of the market that the government oversees.
OSFI brought the stress test into place to ensure prudent underwriting practices and to safeguard the economy amid growing concern about high household debt levels as home prices surged to all-time highs across the country.
And those concerns have continued unabated, particularly as the pandemic altered work habits and reinvigorated many of the country’s largest housing markets and their bedroom communities.
The stress test was last updated this past summer, when the current parameters came into force in June. Previously, borrowers had to show they’d be able to keep up on payments at the higher of their contract rate plus two percentage points or the Bank of Canada’s five-year rate, which was then at 4.79%.
