The Office of the Superintendent of Financial Institutions (OSFI) is reassessing Canada’s mortgage stress test, considering a shift from borrower-focused requirements to stricter lending rules for banks. 
A Shift from Borrowers to Lenders
Currently, the stress test requires uninsured borrowers to qualify at 5.25% or their contract rate plus 2%, ensuring they can afford future rate hikes. However, OSFI’s analysis found that the test hasn’t effectively curbed excessive borrowing. Instead, it’s exploring a loan-to-income (LTI) cap, limiting how many high-debt mortgages banks can issue.
The Loan-to-Income Cap
Since January 31, 2025, banks have been restricted from issuing more than 15% of their new mortgage originations, to borrowers whose mortgage debt exceeds 450% of their annual income. OSFI is now assessing whether this approach could fully replace the stress test.
What This Means for Homebuyers
If the stress test is scrapped, borrowers may find it easier to qualify for a mortgage. However, banks could impose stricter lending caps, limiting access to high-ratio mortgages. While some welcome the change as a boost to affordability, others warn that reducing borrower protections, could increase financial instability.
A final decision is expected by year-end. Stay tuned for updates on how these changes could impact your mortgage options.
Need expert advice on navigating these shifts? Contact Client First Mortgage Solutions today.
