Canada mortgage stress test

The Canada Mortgage Stress Test is a regulatory measure implemented by the Office of the Superintendent of Financial Institutions (OSFI) to ensure that home buyers have the ability to repay their mortgage in the event of a potential rise in interest rates or a reduction in their income. Under this stress test, borrowers are required to prove that they can make their mortgage payments if the interest rate were to increase by 2% over the agreed rate, or if their income were to fall by 20%. This is designed to protect both borrowers and lenders from potential financial difficulties in the future.