Federal banking regulator keeps key mortgage stress test rate unchanged

OTTAWA –

Canada’s banking regulator is holding the rate of interest utilized in a key stress take a look at for uninsured mortgages regular.

The Office of the Superintendent of Financial Institutions says the minimal qualifying price for uninsured mortgages will stay the higher of the mortgage contract price plus two share factors or 5.25 per cent.

Uninsured mortgages are residential mortgages with a down cost of 20 per cent or extra.

OSFI says it makes selections on the minimal qualifying price based mostly on information from its ongoing monitoring of federally regulated monetary establishments, in addition to a variety of vulnerability indicators which embrace Canadian housing market and broader macroeconomic information.

Mortgage charges have been rising this yr because the Bank of Canada has raised its key rate of interest goal seven occasions in an effort to deliver inflation below management.

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

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