“For many Canadians, the most important investment they will ever make is the purchase of a home. Increasingly, however, that dream is becoming unaffordable and unattainable. The recent and rapid rise in housing prices is squeezing middle class Canadians across the entire country and raises concerns about the stability of the overall market.”

Starting June 1st, 2021, the Office of the Superintendent of Financial Institutions (OSFI) will implement a new minimum qualifying rate for all uninsured mortgages.These changes were confirmed in a release Thursday after it reviewed submissions on the plan that it first proposed back in April. 

They stated that the minimum qualifying rate for uninsured mortgages will be the greater of the mortgage contract rate plus 2 per cent, or 5.25 per cent, according to a statement on its website. The new changes to the mortgage “stress test” come as a result of the increase in housing prices. These new rules may make it more difficult to qualify for a mortgage in the short term, however, they are intended to regulate the market and make homeownership more affordable and attainable in the future.

“It is vitally important that homeownership remain within reach for Canadians,” Finance Minister Chrystia Freeland said in a statement. 

If you are currently looking to buy a home, you should confirm your mortgage pre-approval prior to June 1 as OSFI will allow lenders, at their discretion, to grandfather the current stress test rate. This also applies to individuals who already purchased a home and anyone looking to refinance.

If you have already been approved for a mortgage, Rosa-Anna DeMichina from Dominion Lending stated “I think it is best to ask your clients to check with their own bank where they are pre-approved. Some lenders may not allow you to get pre-approved before June 1st and may not. With this hitting right before the long weekend, we don’t know enough yet.”

These changes will benefit Canadians in the long run and will bring more stability and affordability in the housing market. If you are hoping to meet the June 1st deadline, we recommend you speak with your bank today for more information.

If you have any questions regarding the current housing market, our dedicated and experienced team are here to help. If you are looking for a mortgage broker, email us at [email protected] and we are happy to offer our recommendations of qualified brokers in the Lower Mainland.