Mortgage Stress Test Rate Updated According to Market Situation

Mortgage Stress Test Rate Updated According to Market Situation

    February 26, 2020

    Vancouver’s real estate market had been soften quite a bit during the past few months. We observed more market activity from buyer competing for listings. The original stress-test was put in place to ensure home buyer could pay their mortgages when the interest rise. It also controls the market from inflating out of control.

    Finance Minister Bill Morneau and the Office of the Superintendent of Financial Institutions (OFSI) announced on Tuesday that a new benchmark rate that is used in stress test for mortgages will be imposed as of April 6th, 2020. The existing insured rate is based off the five-year conventional mortgage rates offered by the country’s six largest lenders. The reason behind the new benchmark was due to changing market condition and the new rate should reflect that.

    Therefore, the new benchmark insured rate will be the “weekly” median 5-year fixed insured mortgage rate from mortgage insurance applications, plus an additional 2% points according to Department of Finance Canada. OSFI who is in charged of the uninsured rate said its new benchmark will be roughly 4.89% below the existing 5.19%. With a down payment of 20% or less requires a mortgage default insurance will be tested under the insured rate and above 20% will be tested under the uninsured rate.

    The new benchmarks will make borrowing easier for perspective homeowners, which will further increase market activity. The slight change in the stress test makes a difference on how much you can borrow, but it is only marginal adjusting to existing market condition. Nonetheless, it is a win for perspective buyer since many buyers who can afford to own a home based on their income is having problem getting a loan. For those who did manage to acquire a loan purchased a downgraded home.

    Message From This Post's Sponsor

    At Deerwater Dental Wellness, they are committed to helping patients restore their oral health and overall wellness through multidisciplinary dental care at their Vancouver dental office. They aspire to see patients achieve their true smiles in peace, comfort, and healing of the body. This Vancouver dentist strives to help people reach their full potential in life with overall wellness.

    Yoyoe Lu

    Founder and managing principal

    Yoyoe is the founder and managing principal of Claridge. She was ranked one of Vancouver’s top real estate agents. Currently, Yoyoe is our strategic mind leading the team to success. Her affiliation with industry professionals put her ahead of our competitors. Yoyoe is also part of the Rotary Club of West Vancouver, Canadian Homebuilders Association, Urban Land Institute and Urban Development Institute.

    Ashley Osborn

    Development Site and Investment Specialist

    Ashely is our lead land and investment advisor. He has been consistently featured in the annual top 100 real estate deals of British Columbia ranking. With over $15 billion worth of domestic and international real estate investments under his belt, Ashley is one of the top agents in the province. His 20 years of real estate and financial experience make him a master in negotiation and acquisition.

    Patricia Wong Chong

    Investment and Leasing Specialist

    Patricia is our investment and retail leasing advisor. Her experience in brokerage and market research analysis has helped her comprise over $550 million in commercial real estate transactions. Patricia is responsible, detail-oriented, and professional. Her strong work ethic and positive attitude have led her to surpass all her competitors.

    Schumann Li

    Land Assembly & Residential Specialist

    Schumann is a top-producing realtor in the Lower Mainland with more than 30 years’ experience. Over the years, Schumann hasn’t just garnered awards, but the trust of countless customers. Her clients continually refer to her outstanding professionalism, work ethic and poise.

    Wendy Kaip

    Sales Associate

    Whether it’s decoding city policies, strategizing relocation plans, home sellers looking for a trustworthy advisor to unlock their property’s maximum potential- Wendy is here to help every step along the way.

    Prior to real estate, Wendy spent over a decade in the mining industry with her attention to detail, keen negotiation skills, extensive network and strong reputation for getting the deal done, bringing endless value to her current real estate clients.

    Whether you are thinking about selling to a developer, or have more questions about commercial real estate, Wendy invites you to connect, to see how she can utilize her expertise and team to help create value and maximize your real estate goals.

    Simon Chan

    Managing Broker

    Simon is the managing broker of Claridge Real Estate Advisors Inc. His expertise has helped our agents resolve many difficulties. Not only is Simon knowledgeable with real estate legislation, but he is also very detail orientated. With Simon on our team, our agents are confident to conduct businesses and will always get the support they need to ensure they’re not walking on dirty water.

    Frank Zhou


    As the analyst of the company, my key job is to help brokers to find marketable clients and locate feasible development sites by collecting and analyzing up-to-date market transaction data and conducting target market and property-level research. Meanwhile, I am also in charge of maintaining the company’s property database to ensure accuracy and comprehensiveness and continuously upgrading the level of knowledge by staying up to date with hot topics, and market trends, and incorporating findings into everyday work. Before joining the company, I worked for CR Group as a real estate investment manager, focusing on capital raising, equity and debt financing, acquisition and renovation. I hold 2 master’s degrees, one in Housing Management and the other in Economics.