What is a mortgage stress test?

As of October 17, 2016 CMHC now requires all mortgage applicants to qualify using a “stress test” interest rate. The purpose of this test is to qualify applicants using the posted 5-year term mortgage rate. By ensuring that an applicant can afford a mortgage at this higher rate, the homeowner, the banks, and CMHC are protecting themselves from the effects of sharp change in interest rate or other expenses in the future. 

Note: Even though CMHC is qualifying an applicant at a higher rate, the applicant is still only borrowing based on the current (negotiated) interest rate. With this in mind, it is big advantage to work with a retailer who has an existing relationship with lenders who are willing to work with you to help you get you the best rates available.