OSFI eliminates stress test for uninsured mortgage switches starting November 21

Effective November 21, 2024, borrowers renewing their residential uninsured mortgage can switch lenders without being subject to The Mortgage Stress Test Rule introduced back in 2018 – so long as it’s what OSFI refers to as a “straight switch” (Amount and Amortization being the same).

At present, at mortgage renewal time, a borrower finds it more practical, if not the only option, to renew with their existing Lender, even if the rate was not the most competitive market-place offer. If a borrower wanted to switch to a new lender for a better rate resulting in lower monthly payments, the OSFI-imposed Mortgage Stress Test requirements would be reapplied by the new lender, sometimes making qualification more difficult.

With this new rule ”relaxation”, two things will change:
• Homeowners will be able to look for competitive rates at renewal time.
• Lenders will become more competitive in the renewal rates being offered to retain existing mortgage holders about to renew.

It’s a good change for consumers, as it opens up ”market-place” options.