Bank of Canada’s mortgage ‘stress test’ rate climbs higher

Jackie Bowen


Central bank’s rate for deciding if you can afford a mortgage is raised 20 points to 5.34%


As mortgages get more expensive with interest rates rising in Canada, the hurdle that some borrowers must pass is also getting higher.

The interest rate used by the Bank of Canada for mortgage stress-testing went up by 20 basis points Wednesday to 5.34 per cent from 5.14 per cent, where it had been since mid-January of this year.

The rate used has now gone up five times since last May, when it stood at 4.64 per cent.

The central bank’s rate is based on a survey of conventional five-year rates available at the big banks.

Under new rules that came in force on Jan. 1, all home buyers have to go through the mortgage stress test.

The test is based on qualifying for the greater of either the Bank of Canada qualifying rate or the buyer’s contracted interest rate plus two percentage points.


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