Mortgage Advice – June 1 2025
Why the “old” stress test is getting a makeover
Since 2018, Canadians have had to prove they could handle payments at their contract rate + 2 % (or 5.25 %, whichever was higher). OSFI is now shifting the focus from individual borrowers to lenders’ portfolios: no more than 25 % of a bank’s new uninsured mortgages can exceed 4.5 × gross household income. The rule kicked in at each institution’s 2025 fiscal year‑start.
What stays, what changes
| Old rule | New rule |
|---|---|
| You qualify at the greater of contract + 2 % or 5.25 % | Your lender must keep high‑LTI loans below the 25 % cap—you might still face a traditional stress test if the bank is near its limit |
| One‑size‑fits‑all | “Portfolio management” lets each lender set its own guardrails within OSFI’s cap |
| Mainly rate‑driven | Income‑driven: your debts and salary ratio matter even more |
Who could feel the pinch?
Example: Kim and Alex earn $160 k combined. A $750 k mortgage equals 4.7 × income—fine under the old test if they could show enough cash flow, but it might get bumped or repriced if their lender has already burned through its 25 % allowance.
How to keep your file irresistible
- Trim consumer debt: Every $100/month in car loans drops borrowing room by roughly $15 k.
- Boost provable income: Side‑gig? Corporate dividends? Show it on paper before you apply.
- Shorten amortization strategically: A 25‑year schedule lowers the LTI multiple faster than 30 years.
The bottom line
The stress test isn’t gone—it just moved backstage. A proactive chat with a mortgage pro (hi, that’s me!) can clarify whether your dream home fits inside your lender’s new portfolio puzzle pieces. Questions? Let’s talk before those puzzle pieces run out.