The mortgage stress test in Ontario is a regulatory measure aimed at ensuring that homebuyers are able to withstand an increase in interest rates. The test requires homebuyers to qualify for a mortgage at a higher interest rate than the one being offered, to ensure that they will still be able to make their payments if rates were to rise.
In Ontario, the stress test requires homebuyers to qualify for a mortgage at either the Bank of Canada's benchmark rate or two percentage points higher than the contract rate, whichever is higher. This means that if a homebuyer is offered a mortgage at a 3% interest rate, they must be able to qualify for a mortgage at a 5% interest rate.
The purpose of the stress test is to help protect homebuyers from taking on too much debt and to ensure that they are able to make their payments in the event of an interest rate increase. It is also designed to help prevent the housing market from overheating and to reduce the risk of a housing market crash.
How We Can Help
In light of the recent interest rate increases and the implementation of the mortgage stress test in Ontario, it is becoming increasingly important for homebuyers to understand how much they can qualify for when applying for a mortgage. The mortgage stress test requires homebuyers to qualify for a mortgage at a higher interest rate than the one being offered, to ensure that they will still be able to make their payments if rates were to rise.
To help clients understand their purchasing power, you offer a solution with your mortgage app, My Mortgage Toolbox, which includes a STRESS TEST calculator. This calculator can quickly help clients understand their purchasing power based on their income and the current interest rates/stress test, allowing them to determine if the range in which they want to purchase is within their budget.
With the calculator, clients no longer have to be unsure about their mortgage qualifications before having a credit check. They can use the calculator without a credit check to understand their financial standing and make an informed decision.
What Else Our App Can Do
With My Mortgage Toolbox, you can:
Calculate your total cost of owning a home
Estimate the minimum down payment you need
Calculate Land transfer taxes and the available rebates
Determine the maximum loan you can borrow
Estimate your Closing costs
Compare your options side by side
Search for the best mortgage rates
Email Summary reports (PDF)
Use the app in English, French, Spanish, Hindi, and Chinese.
Don't miss out on this opportunity to make informed decisions about your mortgage. Download My Mortgage Toolbox now and stress test your mortgage with ease.