Are We Really Making Mortgages Easier, or Just Leveling the Playing Field?
Here’s something to chew on: Is Canada’s banking regulator really making it easier for borrowers, or are they just fixing a system that was unfair from the start?
The Office of the Superintendent of Financial Institutions (OSFI) just made a big move—no more stress tests for homeowners who want to switch banks when renewing their uninsured mortgages. As of November 21, you’ll be able to shop around for better rates without jumping through the stress-test hoops if you’re doing a straight renewal. Sounds like a win, right?
But let’s dig a little deeper.
Why Was This Even a Thing?
For years, borrowers had to pass a stress test when switching lenders during a renewal, even if they weren’t increasing their loan or extending their mortgage term. Think about it—you’re already paying your mortgage at the current rate, but if you wanted to go to a different bank for a better deal, suddenly you had to prove you could handle payments at a rate two percentage points higher.
And with mortgage rates hitting over 6% in the past two years, that meant passing a test at 8% or higher. You could be paying your mortgage just fine but still get stuck if you wanted to switch lenders. Ridiculous? Many in the industry thought so, and OSFI has finally agreed.
What Does This Mean for Brokers and Borrowers?
For brokers, this is a huge opportunity. It’s going to spark more competition between lenders, and we’re likely to see banks trying harder to offer lower rates to keep their clients from walking. Borrowers, especially those with uninsured mortgages, now have more freedom to shop around at renewal without the stress-test hurdle.
And that’s the key here: it’s not that OSFI is suddenly making it “easier” to get a mortgage—it’s simply removing an outdated rule that made switching harder for no good reason.
A Fair Playing Field?
Another point OSFI made was about fairness.
If you have an insured mortgage (less than 20% down), you’ve been exempt from this stress test when switching lenders. But if you have an uninsured mortgage (more than 20% down), you’ve been stuck with the test. OSFI’s move now levels the playing field between the two types of borrowers.
Let’s be real—if you’re paying your mortgage and want to switch banks to get a better rate, there’s no reason you should be forced to requalify for the loan you’re already handling. It’s not reckless underwriting to make a switch when nothing about your financial situation has changed.
What’s Next?
This change is coming alongside other recent federal mortgage policy updates, like allowing first-time buyers to stretch their insured mortgages over 30 years and smaller down payments on homes worth over $1 million. It’s clear that there’s a shift happening in the Canadian mortgage landscape.
While some might say this will have little impact on the broader market, I think it’s a step in the right direction—giving borrowers more flexibility and forcing lenders to stay competitive.
Less red tape, more choice.
Now that’s something we can all get behind.
So, what does this mean for you?
If you have a renewal coming up, this opens the door to better deals and more options!
P.S. if your mortgage matures or comes up for renewal within the next 6 months, it’s time to start looking at your options. If you’d like a no obligation strategy session for your upcoming renewal, let’s set up a call.
First, you should get your renewal options for your existing lender. Let them know you’re speaking to a mortgage broker. (This is a trade secret to getting your current lender to actually give you their best rates up front).
Second, let’s hop on a call. Here’s my calendar link: