On Jan. 1, it became slightly more difficult to get a mortgage in Canada. Stronger 'stress test' rules released by the Office of the Superintendent of Financial Institutions (OSFI) mean that all borrowers will now have to qualify at a higher interest rate than they're actually paying.
However, explained Chris Sadler, Manager of the Drumheller ATB, the change is actually a good thing.
"The stress test really is about insuring that customers can handle interest rate fluctuations. So, my understanding of it is, if interest rates were to go up two per cent, would [borrowers] still be able to make their mortgage payments?"
The new rules will test whether borrowers can afford a mortgage rate that is two per cent higher than the rate the lender is offering, or the five-year average posted rate from the Bank of Canada (currently 4.99 per cent), whichever is higher.
ATB branches around the province have been voluntarily operating under these rules for the past year.
"The stress test at ATB, we implemented it last year ahead of the game," explained Sadler. "The reason ATB decided to take that initiative is to make sure we had a full year of getting people acquainted with it so that it wasn't a shock or a change for our customers."
Sadler says there was almost no push-back from customers about this change. In fact, he said it was almost eye-opening to show borrowers what could happen if interest rates rose when it came time to renew their mortgage.
"What it is is an education piece. Really what we're saying is, 'five years down the line when you come to renew, could you afford the mortgage at a higher interest rate?' And so, it really assures them and gives them piece of mind that they're able to afford the mortgage for the lifetime of it."