Stress Test - What has Changed?

The mortgage stress test is simply am interest rate which you must use to calculate mortgage qualification. When lenders calculate what mortgage amount you qualify for they do not use the actual interest rate that they offer you, called the contract rate, instead they use a higher interest rate, which is called the stress test interest rate.

Currently, the stress test interest rate is set at 4.79% for all mortgage products. This is not the interest rate that you will pay, it is just used to calculate the mortgage amount you qualify for.

The proposed change in the stress test interest rate is for uninsured mortgages only. Meaning insured or insurable mortgages will still qualify at 4.79%. For uninsured mortgages the stress test rate will be 5.25% as of June 1, 2021.

The definition of uninsured mortgages is a mortgage in which you cannot buy mortgage insurance for. All refinance transactions are uninsured. Properties that are over $1,000 000 in value are uninsured. Some mortgage products for purchase transactions can also be uninsured, it depends on the product.

Rest assured, if you are purchasing with less than 20% down payment, then you must pay the mortgage insurance premium and hence, your mortgage is insured and will qualify at 4.79%.

It can get complicated when qualifying for a mortgage. It is important to get pre-approved before you start house hunting. 

Contact Us
For more information on stress test qualification, contact your local Ajax Mortgage Broker, Sean Stewart at 905-427-9596 or sean@seanastewart.com