Stress Test Rate Drops

For the first time in three years, the Bank of Canada has lowered its five-year qualifying mortgage rate, from 5.34% to 5.19%. This provides some slight relief for homebuyers and mortgage renewers who have to pass the mortgage stress test. The stress test requires potential homebuyers to show they would still be able to make mortgage payments if faced with higher interest rates.

For uninsured mortgages (20% down payment or higher), borrowers need to prove they can qualify at 5.19% or their contract rate plus 2%, whichever is higher. For insured mortgages (less than 20% down payment), borrowers must qualify at 5.19%.

With average 5-year fixed mortgages now under 3%, most fixed-rate mortgage applicants were still having to qualify at the higher 5.34% posted rate. This remains true of the new lower rate of 5.19%, but it does make it easier for applicants to qualify for their mortgage.

The change in the Bank of Canada five-year benchmark rate now means that Canadians can qualify for more home today compared to earlier this year and 2018. This decrease alleviates some of the pressure on first-time homebuyers, who are the most financially strained Canadians entering the housing market.

Tatum Neufeld, BComm
Mortgage Broker • Mortgage Tailors


Oh hey there! I’m Tatum.

Whether you are looking for a home purchase mortgage, renewing an existing mortgage, refinancing, debt consolidation, financing revenue properties or a new home construction mortgage, I take the stress and worry out of the equation.


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