Mortgage Stress Test Unchanged

It’s official… there will be no change to the mortgage stress test….Canada’s bank regulator keeps mortgage stress test unchanged despite calls to relax rules as rates spike.

The mortgage stress test is a tool used by mortgage lenders to determine whether a borrower can afford to make the payments on a mortgage loan. It involves calculating the borrower's debt-to-income (DTI) ratio, which is a measure of how much of their income is used to cover their monthly debts.

To calculate the DTI ratio, the lender will consider the borrower's gross monthly income, as well as their monthly debt payments, including any credit card payments, car loans, student loans, and other debts. The lender will then compare the DTI ratio to a set of standards, known as the mortgage stress test, to determine whether the borrower can afford the mortgage loan.

The mortgage stress test is designed to help lenders assess the risk of lending to a borrower and ensure that they will be able to meet their mortgage payments if interest rates were to rise. It is also intended to protect borrowers from taking on too much debt and becoming over-leveraged.

The mortgage stress test has undergone several changes in recent years, with the goal of making it more stringent and ensuring that borrowers can afford their mortgages even in the event of an economic downturn or an increase in interest rates. However, if you are saying that the mortgage stress test has remained unchanged, then it means that it has not undergone any changes or updates recently.