Real Estate

OSFI adjusts the stress test

  • Last Updated:
  • Apr 10th, 2021 7:25 pm
[OP]
Deal Addict
Mar 20, 2017
1330 posts
1116 upvotes

OSFI adjusts the stress test

OSFI proposes the uninsured stress test to be with the floor 5.25% from June 1, 2021.
Obviously, the proposal will be approved by Christina Freeland since it was designed with her participation.

That's the first policy intervention of 2021 in a cooling direction.

https://www.ratespy.com/new-uninsured-m ... -040818322
114 replies
Banned
Apr 5, 2013
5810 posts
2974 upvotes
keenland
GalvToronto wrote: OSFI proposes the uninsured stress test to be with the floor 5.25% from June 1, 2021.
Obviously, the proposal will be approved by Christina Freeland since it was designed with her participation.

That's the first policy intervention of 2021 in a cooling direction.

https://www.ratespy.com/new-uninsured-m ... -040818322
precursor to higher rates?...or is this all it takes?..
Jr. Member
Jun 28, 2009
162 posts
60 upvotes
Anyone can dumb this down for me? Let’s say $160k yearly income, 20% down payment. If I were to max out, how much “house” $ did I just lose? (4% buying power confused me so would prefer to see dollar values)

Like I mean if I were to max out my purchase as well. So just wanted to understand max purchase before and after revisions to stress test at 20% dp
Member
Feb 7, 2018
373 posts
514 upvotes
Can someone please explain why they’re targeting uninsured mortgages only and how this helps appease the RainbowBear Face over at r/canadahousing.
Sr. Member
User avatar
Jul 30, 2013
662 posts
494 upvotes
GTA
crucial1 wrote: If your putting 20% down it wouldn't effect you at all would it...it says uninsured.
I think you have it reversed, insured mortgage means less than 20% downpayment.
Uninsured mortgage means 20% or greater downpayment.
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Deal Addict
Jul 3, 2007
3392 posts
3722 upvotes
Toronto
mao246 wrote: Anyone can dumb this down for me? Let’s say $160k yearly income, 20% down payment. If I were to max out, how much “house” $ did I just lose? (4% buying power confused me so would prefer to see dollar values)

Like I mean if I were to max out my purchase as well. So just wanted to understand max purchase before and after revisions to stress test at 20% dp
if you qualified for 800k mortgage, now you qualify for 760k
wiab89 wrote: Can someone please explain why they’re targeting uninsured mortgages only and how this helps appease the RainbowBear Face over at r/canadahousing.
it screws them even more lol
Member
Aug 13, 2020
380 posts
441 upvotes
This will affect investors for rental properties as you require more than 20% downpayment. Is this correct or I am missing something?
Sr. Member
Mar 30, 2017
857 posts
556 upvotes
there you go, people gonna rush to buy while they can max out now, expect price to go further up
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Deal Fanatic
Dec 11, 2003
8226 posts
585 upvotes
It was around 5.2% before this pandemic IIRC.
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Member
Feb 7, 2018
373 posts
514 upvotes
DealFind25 wrote: This will affect investors for rental properties as you require more than 20% downpayment. Is this correct or I am missing something?
Why not just make a new stress test for rentals? Why not stress test at 18% interest rates because it happened once to a bunch of boomers? Any number of nonsensical scenarios possible with Ruden and the OSFI clowns... worst part is we can’t even get rid of them.
Sr. Member
Mar 30, 2017
857 posts
556 upvotes
DealFind25 wrote: This will affect investors for rental properties as you require more than 20% downpayment. Is this correct or I am missing something?
less people to buy investment properties -> less rental stock -> screw low income renters and help middle class to buy their own home Face With Tears Of Joy
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
Newbie
Mar 22, 2007
95 posts
68 upvotes
Westmount
From an old article from “Canadian mortgage trends” described the change in purchasing power when they dropped the stress test from 4.94% to 4.79%:

Rob McLister, founder of RateSpy.com, calculated that a buyer earning $70,000 a year and purchasing with the minimum 5% down would be able to afford roughly $4,000 more home, or about 1.2%.

I am going to extrapolate this. From this article i can assume the home is worth $333,333 (since $4000 is 1.2% of the purchase price). If every 0.15% point change means a change of 1.2% or $4000 then, when OFSI increases stress test from 4.79 to 5.25 (a 0.46% point increase) that means in a similar situation you can now only afford a home that is 12K less than before. Which amounts to about 3.6%. If you extrapolate this to an uninsured mortgage (so assuming 1M home with 20% down) you can in theory only qualify now for a mortgage worth $770000 while before you may have qualified for an 800K mortgage with 20% down.

There is def some leaps in logic here, so correct if I’m wrong lol
Deal Addict
Jan 15, 2010
1215 posts
1441 upvotes
Toronto
I'm confused, is this a stress test of uninsured mortgages (>20% DP) or is it a typo?
Deal Addict
Jul 3, 2007
3392 posts
3722 upvotes
Toronto
DaMan12 wrote: I'm confused, is this a stress test of uninsured mortgages (>20% DP) or is it a typo?
yes uninsured 20% + downpayment only
Deal Addict
Jan 15, 2010
1215 posts
1441 upvotes
Toronto
joepipe wrote: yes uninsured 20% + downpayment only
So <20% mortgages get stress tested at 4.79% and >20% at 5.25%?
Member
Feb 7, 2018
373 posts
514 upvotes
DaMan12 wrote: So <20% mortgages get stress tested at 4.79% and >20% at 5.25%?
If our pandemic response wasn’t indication enough - our govt is a complete joke
Member
Dec 25, 2019
206 posts
225 upvotes
DaMan12 wrote: So <20% mortgages get stress tested at 4.79% and >20% at 5.25%?
yes exactly , this will target buyers , investors with %20 and more downpayment . also anybody buying a 1m+ house will be effected since they have to put %20 downpayment because CMHC doesnt insure houses more than 1m....it will definitely effect the market , not in a big way. mostly moving up ppl , investors and ppl with lots of money. First time buyers usually bring less than %20 downpayment anyways . this might put more pressure for cheaper condos and houses in the market since there will be more buyers for them ...
Member
Dec 25, 2019
206 posts
225 upvotes
mikelkoby123 wrote: How does this even change anything. Jesus
it will definitely make an impact for some buyers , Government putting a brake on mostly expensive houses and buyers with money without touching the first time buyers and cheaper houses ... First time buyers are untouched but they might wanna hurry for the place they want after July there might be couple of more buyers for the house/condo they want ...

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