Canada’s banking regulator to make announcement on mortgage stress test

OTTAWA –

Canada’s banking regulator is predicted to make an announcement relating to the rate of interest utilized in a key stress check for uninsured mortgages this morning.

As inflation stays sizzling, the price of borrowing has skyrocketed for Canadians.

The Bank of Canada has hiked its key rate of interest seven consecutive occasions since March, bringing it to 4.25 per cent — the best charge since January 2008.

Before the central financial institution’s aggressive charge hike cycle, the Office of the Superintendent of Financial Institutions (OSFI) stated on Dec. 17, 2021 that the minimal qualifying charge for uninsured mortgages would stay the larger of the mortgage contract charge plus two proportion factors or 5.25 per cent.

At the time, OSFI stated in an atmosphere characterised by elevated family debt and low rates of interest, it’s important that lenders check debtors to make sure that they will pay their money owed underneath extra opposed circumstances.

Last week, OSFI Superintendent Peter Routledge responded to calls to decrease or remove the minimal qualifying charge, saying the regulator sees nice threat in speculating on the mortgage charge cycle and doesn’t contemplate the stress check to be a software to handle the demand for housing.

This report by The Canadian Press was first printed Dec. 15, 2022.