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Ministry of Finance follows OSFI’s uninsured mortgage announcement with heightened stress test for insured mortgages also effective June 1st.
On May 20th, 2021 at approximately 1pm, the Office of the Superintendent of Financial Institutions announced the result of its consultation regarding the uninsured mortgage stress test found in B20. As of June 1st, uninsured mortgages must qualify at the greater of a 5.25% interest rate or the contract rate plus 2%.
Following closely thereafter, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, issued a statement of her own, announcing the alignment of the insured stress test with the uninsured stress test, also effective June 1st.
So what this means is the proposed new rate would be higher than the current 4.79% and going forward, will no longer be based on bank posted rates. It will be set a minimum of once per year by OFSI. If your clients have been considering their mortgage options for this year, June 1st is an important date for them.