What is the federal mortgage stress test, and how does it affect Alberta buyers?
Correct Answer
B) It makes buyers qualify at a rate above their contract rate, to show they can handle increases
For uninsured mortgages, OSFI requires federally regulated lenders to qualify borrowers at its minimum qualifying rate: the greater of the contract rate plus 2% or 5.25%. The test applies to Alberta buyers borrowing from those lenders whether the home is owner-occupied or not, and the 5.25% floor is OSFI's own figure, not a Bank of Canada qualifying rate.
Why This Is the Correct Answer
The stress test requires borrowers to qualify at a rate higher than their contract rate. OSFI's current rule for uninsured mortgages is the greater of the contract rate plus 2% or 5.25%, which shows whether the borrower could handle higher payments. This answer captures that purpose.
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