The federal government is changing the stress test rate for insured mortgages starting April 6.
The government says the change will allow the rate to be more representative of the mortgage rates offered by lenders and more responsive to market conditions.
The new minimum qualifying rate will be the greater of the borrower’s contract rate or the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus two percentage points.
The stress test rate currently is the greater of the borrower’s contract rate or the Bank of Canada five-year benchmark posted mortgage rate, which is based on the posted rates at the six largest banks.
Finance Minister Bill Morneau says the government wanted to make the stress test more dynamic to market conditions.