Canada's mortgage regulator, the Office of the Superintendent of Financial Institutions (OSFI), has announced a significant policy change that will benefit renewing mortgage borrowers. Starting November 21, 2024, borrowers looking to switch lenders at renewal will no longer be subject to the stress test requirement, provided they maintain the same loan amount and amortization schedule. This adjustment applies to uninsured mortgages, typically those with a down payment of 20% or more.
Previously, borrowers had to pass the stress test when switching lenders, even if they simply wanted to find better rates. This requirement deterred many from shopping around for more competitive mortgage terms. By eliminating the stress test for renewal switches, OSFI hopes to encourage competition among lenders, potentially leading to better rates and more choices for consumers.
The move addresses concerns raised by both borrowers and the mortgage industry regarding the imbalance between insured and uninsured mortgages. Insured borrowers, who had smaller down payments, have already been exempt from the stress test at renewal since early 2024. OSFI’s decision now levels the playing field, giving uninsured borrowers similar flexibility.
This change comes as part of OSFI's broader efforts to ensure fairness in the mortgage market and to support responsible lending. The hope is that with fewer barriers in place, homeowners can secure more favourable terms at renewal without the stress of requalifying under stringent conditions.
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