How the mortgage stress test is impacting qualification amounts

The mortgage stress test in Canada has created a discrepancy in the size of mortgage loans borrowers can qualify for, as the stress test rate for a 5-year fixed mortgage is 2% higher than that for a variable mortgage. As a result, many borrowers are choosing a variable-rate mortgage to maximize the amount of the mortgage they can qualify for, even if their actual preference is for a fixed-rate mortgage. To get ahead of the mortgage stress test, borrowers can choose a shorter fixed-term mortgage or a private mortgage lender. Credit unions also offer mortgage products that qualify the borrower at the actual contract rate or the contract rate plus 1%. Borrowers are advised to select a mortgage type that best suits their needs and budget.