The new stress test was announced by the Office of the Superintendent of Financial Institutions on May 20.
According to lowestrates.ca, the current lowest five-year fixed mortgage is 1.69 per cent as of Tuesday afternoon.
Let’s say a home buyer hopes to get qualified for a mortgage with a rate of 1.69 per cent in order to buy a $716,828 home.
But given that 1.69 plus two per cent is less than 5.25, the borrower would be stress tested against a 5.25 per cent interest rate.
Prior to June 1, this borrower would have been tested against the Bank of Canada’s five-year average conventional mortgage rate, which was 4.79 per cent as of last Wednesday.
While interest rates are currently at record lows as a result of the pandemic, they’re not guaranteed to stay that way over the long term.