How the removal of the mortgage stress test for renewals will reshape the marketplace
What is the Mortgage Stress Test, and What’s Changing?
The mortgage stress test requires borrowers to qualify for a mortgage at a rate higher than their actual contract rate, ensuring they can handle potential rate increases. For uninsured mortgages, this was set at 2% above the contract rate. However, as of November 21, 2024, homeowners renewing their mortgage can switch lenders without requalifying under the stress test, a significant change that increases flexibility and competition.
The benefits for borrowers
The recent removal of the mortgage stress test for switching lenders during renewals is a major step forward for Canadian homeowners. With this change, you can now explore better deals without the extra hurdle of qualifying at a higher stress test rate. This means:
More savings from lower interest rates.
The flexibility to switch lenders and secure better terms without added qualification stress.
For many, this change could translate into meaningful financial relief, particularly in today’s higher-rate environment.
Increases competition among mortgage lenders
This shift is set to ignite greater competition among lenders, benefiting borrowers in multiple ways:
Lenders will need to offer more attractive rates and terms to retain clients.
Borrowers have increased leverage to negotiate better deals or explore alternatives.
The mortgage market becomes more consumer-friendly, fostering transparency and innovation.
Mortgage brokers also gain a significant opportunity to guide clients through this more competitive landscape, ensuring they make informed decisions.
How the stress test removal could influence mortgage rates
The removal of the stress test could influence rates and borrower behavior:
Competition among lenders might put downward pressure on rates.
Borrowers gain the power to negotiate with their current lender or easily switch to a better one.
Overall, this change levels the playing field, making it easier for you to achieve financial goals.
What Should You Do Next?
If your mortgage renewal is approaching, this is the perfect moment to explore your options:
Compare rates and terms across multiple lenders to maximize your savings.
Work with a professional who can help you navigate this new, more flexible environment.
Take proactive steps early to secure the best possible outcome for your renewal.
Let’s Get Started
Ready to make the most of this new opportunity? Don’t leave your mortgage renewal to chance!
Click here to book a free discovery call with our team of mortgage experts. We’ll help you explore the best options and guide you toward saving more on your next term.
Take control of your mortgage renewal today. Your future self will thank you!