How to do Mortgage Stress Test in 2022-23
October 14, 2022 | Posted by: Ron Chan
You're ready to move forward with buying a Winnipeg area home, but are nervous about Canada's mortgage stress test. In fact, you may not even know exactly what it is, which has you feeling even more uncertain about getting approved for a mortgage.
You've come to the right place.
Instead of providing a DIY guide for how to do a mortgage stress test, we're going to help you get it done. But first, here a practical look at exactly what you need to know about the state of the mortgage stress test for 2022-23.
What You Need to Know About Canada's Mortgage Stress Test in 2022-23 and Where to Get Helping Hand
What is the Mortgage Stress Test?
Lenders need confidence that you can cover your mortgage. The stress test provides them with that confidence. It determines whether or not you can afford the principal and interest payments should interest rates increase. In June of 2021, the federal government raised the minimum financial bar that anyone applying for a mortgage must meet, boosting the stress test level to 5.25% or two full percentage points above the borrower's mortgage rate, whichever is higher.
What Has Changed for the Mortgage Stress Test in 2022-23?
Last year (2021) it was an easy enough test to pass given that fixed and variable rate mortgages were at record lows (around 2%). But now, the stress test has become a bit more stressful for some. With mortgage rates above 5% we're now tapping into that 'two full percentage points above the borrower's mortgage rate' territory. As such, new buyers will have a harder time qualifying for a mortgage than they would have earlier in the annum. It's also a potential bummer for those doing renewals.
How to Pass the Updated Stress Test Rate?
As alluded to above, if you secured a mortgage at the same time last year, you would have had a much easier time passing the mortgage stress test. But with advertised mortgage rates - plus 2% points being added - it's more challenging for some new buyers. For this reason, you need to find a way to lower the quoted mortgage rates. That's where a mortgage broker comes in. When you partner with a reputable mortgage broker, you gain access to lower unadvertised mortgage rates. This lowers the mortgage stress test requirement, making it easier for you to 'pass'. Further, a longstanding (in the community) mortgage broker will have partnerships with alternative private lenders. The latter opens up your options so that you don't have to go through traditional lenders (Canada's Big Banks) which are beholden to the government's stress test requirements. Learn more about alternative lenders here, and how to find one near you.
How to Do Mortgage Stress Test, Right Now
Now that you have a better understanding of Canada's mortgage stress test, and why it has been a hot topic in the news of late, you're ready to get it out of the way. That said, you still don't feel as confident as you'd like to. Again, that's what we're here for. We will walk you through the entire process to make sure that you do the mortgage stress test from the best position possible. We will ensure that you take the test against the best possible interest rates, and will be there with alternative options should it be problematic.
How to do the mortgage stress test for a Winnipeg area home? Just call 204.290.9950. It's that simple.