Mortgage Stress Test Likely to Remain Unchanged Says Big Bank
Canada’s much buzzed about and, at times, controversial mortgage stress test is up for review.
On December 15, the federal government will decide on potential adjustments to the mortgage stress test’s minimum qualifying rate (MQR) on December 15.
In a report released yesterday, RBC Assistant Chief economist Robert Hogue says policymakers are likely going to err on the side of caution and leave the substantial two percentage-point buffer in place. This is despite the current climate of sky-high interest rates that we haven’t seen in years.
“Now that interest rates have surged to their highest levels in more than a decade, the odds of a further spike in the period ahead have greatly diminished,” writes Hogue. “This will (or should) be an important consideration when Ottawa decides on potential adjustments to the mortgage stress test’s minimum qualifying rate (MQR) on December 15. Whether there will be any changes made to the size of the MQR’s hefty buffer is another matter.”
Hogue says he suspects policymakers will want to maintain a high degree of stringency in order to contain borrower or systemic risks in still highly uncertain times.