Proposed Higher Stress Test Will Soon Be A Reality

Mortgage news was very prevalent this week as it was proposed the stress test would go up from the current 4.79% to 5.25%. Every time it is proposed, it will become a reality. So let’s examine how it will affect the average consumer.

The only consumers being affected are uninsured mortgagors buying with 20% or more down or refinances. High ratio government insured mortgages will still have the same stress test at 4.79%. You would think it would be the other way around. Consumers will be able to afford approximately 4% less. Therefore, if you qualify for a $400,000 mortgage previously, you know will qualify for $384,000. This is not going to affect the market very much.

The Canadian government is under pressure to control the escalation of prices. The higher stress test won’t have a great effect.

I am concerned what future housing restrictions may come. Interference by the regulators is never good and only models up the natural flow of the market.