Canada’s mortgage stress test explained

Canada’s mortgage stress test ensures borrowers can afford payments if rates rise or finances change. It requires qualifying at a higher interest rate and differs for insured (down payment <20%) and uninsured mortgages (down payment ≥20%). Insured mortgages use the Bank of Canada’s benchmark rate; uninsured mortgages use lender benchmarks. Recent exemptions allow stress test waivers for uninsured mortgage switches without increased debt. Refinancing still requires the test. The test limits borrowing to prevent overextension.