April 9, 2021
Canada's financial regulator on Thursday proposed a change to a four-year-old financial stress test that would alter the benchmark used to set the minimum qualifying rate, restarting a consultation that it shelved over a year ago.
The Office of the Superintendent of Financial Institutions proposed a fixed rate of 5.25%, replacing the originally planned benchmark of the weekly median five-year fixed insured rate calculated from mortgage insurance applications, which stakeholders said would be "highly volatile," it said in a letter sent to lenders seeking their feedback.
The benchmark will be either the greater of a range of rates submitted by lenders plus 200 basis points - the rate already in use - or 5.25%, according to the letter.
The change would drop the use of banks' advertised rates that tend to be higher than actual market rates to determine the minimum qualifying rate.
Please feel free to contact me with any questions you may have. It would be a pleasure to assist you or any one of your friends or family members!