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Mortgage Stress Test Rate Decreased

The purpose of using a benchmark rate when qualifying for a mortgage is to ensure that one can still manage their mortgage payments if interest rates were to increase.

This Qualifying Benchmark Rate has decreased from 5.34% to 5.19%

Benchmark rates, in the long run, will help to create stability in the mortgage market in Canada while making sure that there is not a bubble that is created in the meantime. Although mortgage rates in Canada are still very low, it is a mistake to borrow more money than you can comfortably repay, and due to that reasoning the benchmark rate has been introduced to keep the Canadian housing market in check.

Who decides what this rate should be?

The Bank of Canada surveys the six major banks’ posted 5-year fixed rates every Wednesday and uses a mode average of those rates to set the official benchmark and is published by the Bank of Canada every Thursday.

Who is effected by this stress test when qualifying for a mortgage?

Everyone applying for a mortgage will have to qualify at this Benchmark Rate, regardless of their down payment.

The qualifying rate change means someone making a 5% down payment could afford:

  • $2,800 (1.3%) more home if they earn $50,000 a year

  • $5,900 (1.3%) more home if they earn $100,00 per year


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