The “stress test” is back in the news. This time, it’s positive news, at least relative to its last few news releases.
This time, it means mortgages will be slightly easier to qualify for and that means borrowers will be able to spend slightly more on a house and still qualify for the mortgage.
A story on cbc.ca details how — in theory — the most recent drop in the interest rate from 4.94 per cent to 4.79 per cent will have that impact on the stress test. In one example, a buyer qualifying to buy a home worth just over $500,000 would see an “approval amount” increase of around $8,000.
As you may recall, the stress test was designed to make sure Canadians applying for or renewing an insured mortgage would still be able to meet their mortgage payments if rates went up. In the beginning, it was known as Guideline B-20.
One economist told CBC that with record low interest rates, “it's hard to argue that housing hasn't become more affordable.”