Insured and Uninsured Mortgage Stress Test Changes Confirmed for June 1

Marci Deane • May 21, 2021

This change does not impact existing mortgage holders or buyers who already have a firm approval in place for an upcoming purchase.

Starting June 1, both insured and uninsured mortgage borrowers will be subject to a stricter stress test when qualifying for their mortgage.


The Office of the Superintendent of Financial Institutions (OSFI) confirmed on Thursday that it will move ahead with its stress test changes first announced last month, which will apply to uninsured mortgages (typically those with more than a 20% down payment).


Soon after, the Department of Finance confirmed it will follow OSFI’s lead, and apply the same higher qualifying rate to insured mortgages, or those with less than 20% down.


In both cases, borrowers will need to prove they can afford payments based on the higher of the contract rate plus 2%, or a new floor rate of 5.25%, up from the current 4.79%.


“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,” Finance Minister Chrystia Freeland said in a statement. “The federal government will align with OSFI by establishing a new minimum qualifying rate for insured mortgages…It is vitally important that homeownership remain within reach for Canadians.”


Both OSFI and the DoF said they will review the floor rate annually, likely each December at a minimum.


The Impact on Borrowers

Applying the higher stress test to insured borrowers will impact roughly 1 in 5 mortgage borrowers, according to data from the Bank of Canada. It will also take direct aim at first-time borrowers who are more likely to be putting less than 20% down on a mortgage.


The higher minimum stress test is expected to cut maximum buying power by between 4% and 4.5%. For a median-income household, that would reduce the maximum purchase price from $442,000 to $422,000, according to previous estimates from National Bank.


It’s estimated that this change will reduce purchasing power for uninsured borrowers by between 4% and 4.5%. By comparison, the B-20 stress test implemented in January 2019 requiring homebuyers to qualify at the higher of either the 5-year posted rate or the contractual rate plus 200 basis points reduced purchasing power by 22%.


“Today’s news is both bad news and good news for (first-time buyers),” wrote Rob McLister, mortgage editor at RATESDOTCA. “Obviously, it cuts buying power, but that also means fewer people will be able to bid as much for homes, reducing some price pressure.”


Mortgage Professionals Canada issued a statement to members on Thursday, noting it was disappointed that the minister decided to move so quickly in applying the stricter stress test to insured mortgages.


“Given the traditional audience for insured mortgages, namely young aspiring middle-class families, single individuals, and the recently separated, all owner occupiers of the properties they purchase, MPC would have preferred the insured qualification rate had not been increased in the interest of this community,” the association said. “Given the rapid rise in prices, making qualification more stringent now will disqualify many of the Canadians the government has promised to support.”


Bank of Canada Concerned About Home Prices, Household Debt

The new stress test changes fell on the same day that the Bank of Canada voiced concern about unsustainable house prices and growing household debt.


“It is important to understand that the recent rapid increases in home prices are not normal,” Bank of Canada Governor Tiff Macklem said following the release of the Bank’s annual Financial System Review, which found the share of highly indebted households taking out mortgages is now up to 22%.


“Some people may be thinking that the kind of price increases we have seen recently will continue. That would be a mistake,” Macklem added. “Interest rates are very low. That means there is more potential for them to go up…Borrowers and lenders both have roles in ensuring that households can still afford to service their debt at higher rates.”


The Bank also unveiled a “House Price Exuberance Indicator” meant to measure nine major markets across Canada for expectations that local home prices will continue to rise. The indicator currently finds that the Toronto region, Montreal and Hamilton are in exuberant territory, with Ottawa not far off.


courtesy of https://www.canadianmortgagetrends.com

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Is Alternative Lending the Right Choice for Your Mortgage Needs?

By Marci Deane • December 17, 2025
Alternative Lending in Canada: What It Is and When It Makes Sense Not everyone fits into the traditional lending box—and that’s where alternative mortgage lenders come in. Alternative lending refers to any mortgage solution that falls outside of the typical big bank offerings. These lenders are flexible, creative, and focused on helping Canadians who may not qualify for traditional financing still access the real estate market. Let’s explore when alternative lending might be the right fit for you. 1. You Have Damaged Credit Bad credit doesn’t have to mean your homeownership dreams are over. Many alternative lenders take a big-picture approach . While credit scores matter, they’ll also look at: Stable employment Consistent income Size of your down payment or existing equity If your credit has taken a hit but you can demonstrate strong income and savings—or have a solid explanation for past credit issues— an alternative lender may approve your mortgage when a bank won’t. Pro tip: Use an alternative mortgage as a short-term solution while you rebuild your credit, then refinance into a traditional mortgage with better terms down the line. 2. You're Self-Employed Being your own boss has its perks—but mortgage approval isn’t usually one of them. Traditional lenders require verifiable, consistent income—often two years’ worth. But self-employed Canadians typically write off significant expenses, reducing their declared income. Alternative lenders are more flexible and understanding of self-employed income structures. If your business is profitable and your personal finances are healthy, you may qualify even with lower stated income. Even if interest rates are slightly higher, this option is often worth it—especially when balanced against tax planning and business deductions . 3. You Earn Non-Traditional Income Today’s income sources aren’t always conventional. If you earn through: Airbnb rentals Tips and gratuities Rideshare or delivery apps (like Uber or Uber Eats) Commissions or contracts You might face challenges with traditional lenders. Alternative lenders are often more willing to work with these non-standard income streams , especially if the rest of your mortgage application is strong. Some will consider a shorter income history or evaluate your average earnings in a more flexible way. 4. You Need Expanded Debt-Service Ratios Canada’s mortgage stress test has made it harder for many borrowers to qualify with big banks. Alternative lenders can offer more generous debt-service ratio limits —meaning you might be able to qualify for a larger mortgage or a more suitable home, especially in competitive markets. While traditional GDS/TDS limits typically sit at 35/42 or 39/44 (depending on your credit), some alternative lenders will go higher, especially if: You have a larger down payment Your loan-to-value ratio is lower Your overall financial profile is strong It’s not a free-for-all—but it’s more flexible than bank lending. So, Is Alternative Lending Right for You? Alternative lending is designed to offer solutions when life doesn’t fit the traditional mold . Whether you're rebuilding credit, running your own business, or earning income in new ways, this path could help you get into a home sooner—or keep your current one. And here’s the key: You can only access alternative lenders through the mortgage broker channel . Let’s Explore Your Options Not sure where you fit? That’s okay. Every mortgage story is unique—and I’m here to help you write yours. If you’re curious about alternative mortgage products, want a second opinion, or need help getting approved, let’s talk . I’d be happy to help you explore the best solution for your situation. Reach out anytime. It would be a pleasure to work with you.

Bank of Canada Rate Announcement Dec 10th, 2025

By Marci Deane • December 10, 2025
Bank of Canada maintains policy rate at 2.1/4%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario December 10, 2025 The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. Major economies around the world continue to show resilience to US trade protectionism, but uncertainty is still high. In the United States, economic growth is being supported by strong consumption and a surge in AI investment. The US government shutdown caused volatility in quarterly growth and delayed the release of some key economic data. Tariffs are causing some upward pressure on US inflation. In the euro area, economic growth has been stronger than expected, with the services sector showing particular resilience. In China, soft domestic demand, including more weakness in the housing market, is weighing on growth. Global financial conditions, oil prices, and the Canadian dollar are all roughly unchanged since the Bank’s October Monetary Policy Report (MPR). Canada’s economy grew by a surprisingly strong 2.6% in the third quarter, even as final domestic demand was flat. The increase in GDP largely reflected volatility in trade. The Bank expects final domestic demand will grow in the fourth quarter, but with an anticipated decline in net exports, GDP will likely be weak. Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility. Canada’s labour market is showing some signs of improvement. Employment has shown solid gains in the past three months and the unemployment rate declined to 6.5% in November. Nevertheless, job markets in trade-sensitive sectors remain weak and economy-wide hiring intentions continue to be subdued. CPI inflation slowed to 2.2% in October, as gasoline prices fell and food prices rose more slowly. CPI inflation has been close to the 2% target for more than a year, while measures of core inflation remain in the range of 2½% to 3%. The Bank assesses that underlying inflation is still around 2½%. In the near term, CPI inflation is likely to be higher due to the effects of last year’s GST/HST holiday on the prices of some goods and services. Looking through this choppiness, the Bank expects ongoing economic slack to roughly offset cost pressures associated with the reconfiguration of trade, keeping CPI inflation close to the 2% target. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. Uncertainty remains elevated. If the outlook changes, we are prepared to respond. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. Information note The next scheduled date for announcing the overnight rate target is January 28, 2026. The Bank’s next MPR will be released at the same time.

Is Refinancing Your Mortgage a Good Way to Consolidate Debt?

By Marci Deane • December 3, 2025
If you're a homeowner juggling multiple debts, you're not alone. Credit cards, car loans, lines of credit—it can feel like you’re paying out in every direction with no end in sight. But what if there was a smarter way to handle it? Good news: there is. And it starts with your home. Use the Equity You’ve Built to Lighten the Load Every mortgage payment you make, every bit your home appreciates—you're building equity. And that equity can be a powerful financial tool. Instead of letting high-interest debts drain your income, you can leverage your home’s equity to combine and simplify what you owe into one manageable, lower-interest payment. What Does That Look Like? This strategy is called debt consolidation , and there are a few ways to do it: Refinance your existing mortgage Access a Home Equity Line of Credit (HELOC) Take out a second mortgage Each option has its own pros and cons, and the right one depends on your situation. That’s where I come in—we’ll look at the numbers together and choose the best path forward. What Can You Consolidate? You can roll most types of consumer debt into your mortgage, including: Credit cards Personal loans Payday loans Car loans Unsecured lines of credit Student loans These types of debts often come with sky-high interest rates. When you consolidate them into a mortgage—secured by your home—you can typically access much lower rates, freeing up cash flow and reducing financial stress. Why This Works Debt consolidation through your mortgage offers: Lower interest rates (often significantly lower than credit cards or payday loans) One simple monthly payment Potential for faster repayment Improved cash flow And if your mortgage allows prepayment privileges—like lump-sum payments or increased monthly payments—those features can help you pay everything off even faster. Smart Strategy, Not Just a Quick Fix This isn’t just about lowering your monthly bills (although that’s a major perk). It’s about restructuring your finances in a way that’s sustainable, efficient, and empowering. Instead of feeling like you're constantly catching up, you can create a plan to move forward with confidence—and even start saving again. Here’s What the Process Looks Like: Review your current debts and cash flow Assess how much equity you’ve built in your home Explore consolidation options that fit your goals Create a personalized plan to streamline your payments and reduce overall costs Ready to Regain Control? If your debts are holding you back and you're ready to use the equity you've worked hard to build, let's talk. There’s no pressure—just a practical conversation about your options and how to move toward a more flexible, debt-free future. Reach out today. I’m here to help you make the most of what you already have.