OSFI to Remove Stress Test for Uninsured Mortgage Switches – Effective Nov. 21, 2024

Starting November 21, 2024, OSFI (Office of the Superintendent of Financial Institutions) will eliminate the stress test requirement for borrowers switching lenders for uninsured mortgages (those with a down payment of 20% or more).

KEY POINTS:

• Stress Test Removal: Borrowers with uninsured mortgages switching lenders won’t need to pass the Minimum Qualifying Rate (MQR), making it easier to shop for better rates.

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  Why the Change?

  • Feedback from the industry and consumers showed an imbalance between insured and uninsured mortgage renewals.

  • OSFI data suggests the risks the stress test was meant to address have not significantly materialized.

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  Impact on Borrowers:

  • Borrowers can now switch lenders at renewal without the risk of disqualification due to a stress test.

  • This change gives homeowners more flexibility to secure better rates and terms.

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  Encourages Competition: With the stress test gone, lenders will compete more, offering borrowers improved options and rates.

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  Industry Reactions:

  • Ron Butler (Butler Mortgage) called it a fair change that benefits borrowers, removing unnecessary obstacles at renewal.

  • Lauren van den Berg (Mortgage Professionals Canada) praised the decision as a "win for Canadians," offering more choice and flexibility.

This move is expected to provide homeowners with more opportunities to secure the best mortgage rates without added barriers.