BCREA Welcomes Change to Stress Test
Vancouver, BC - February 19, 2020. As the voice of BC's 23,000 REALTORS®, the British Columbia Real Estate Association (BCREA) welcomes Minister of Finance Bill Morneau's announcement of changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages, also known as the "stress test".
Minister Morneau announced that as of April 6, 2020, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2 per cent.
"Today's announced change to the stress test for insured mortgages is a move in the right direction to more accurately align qualifying rates with mortgage rates being offered in the market," says BCREA Chief Economist Brendon Ogmundson. "For the last year, the Bank of Canada's benchmark posted rate has been much higher than 2 per cent over contract rates, leading to overly onerous mortgage qualifications."
"We hope this signals a similar change is coming for uninsured mortgages," Ogmundson adds.
The stress test has been keeping qualified buyers out of homes they can afford. That's why BCREA and CREA have recommended that the federal government:
- review the mortgage stress test to ensure the realities of local real estate markets are taken into consideration, and
- allow existing mortgage holders to be exempted from the stress test at the time of renewal.
You can read our housing affordability recommendations here.
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