New Mortgage Rules for 2018  

As of January 1st, 2018 buyers applying for a mortgage may have to prove that they’re able to handle interest rates that are substantially higher than their contract rate.

Canada’s federal finance regulator announced in October last year that buyers with a 20% or more down payment will have to face a stress test, similar to buyers with smaller down payments starting this year.


What is a Stress Test?

The stress test means that a mortgage application will be approved based on the Bank of Canada’s five-year benchmark rate, which currently sits at 4.99%, or their contract rate plus 2%, whichever is higher. This will cause many home buyers to settle for a less expensive home than what they would’ve originally been able to afford.


Renewals and Refinances

Lenders don’t have to apply the stress test to clients renewing an existing mortgage. If, however you choose to shop around for a better rate and don’t meet the stress test requirements, you will have to stay with your current financial institution.

If you plan to refinance your mortgage to pay off debt or do some renovations, you will have to qualify under the stress test rather than your contract mortgage rate.


Does Everyone Have To Do A Stress Test?

If you signed a purchase agreement prior to January 1st and are still awaiting possession, lenders will not apply the stress test. This remains true for pre-construction purchase agreements as well.

When evaluating whether or not to apply the stress test, financial institutions will consider the size of the mortgage compared to the price of the property as well as the buyer’s credit scores. This means not all buyers will have to face the stress test.

These new rules may turn some buyers away from being able to purchase a property or refinance their mortgage. The goal is for the stress test to ensure housing expenses remain below a certain threshold even if rates rise, promoting increased long term financial stability for Canadian families.


What Now?

If you’re thinking about buying or upgrading your home and want to see if the new mortgage rules affect you, give us a call. We’d be happy to get a better understanding of your goals and set you up with a great mortgage specialist so you know if, or how much your purchase plans may be affected. We’ll give you our honest feedback about what options may be right for you.



Jason Rustand with RE/MAX Real Estate serves with the highest level of integrity and excellence every time.  For more info on this topic or others related to real estate contact LIKE our Jason Rustand Team Facebook page, call Jason direct at 780.980.2828, email or visit


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