With mortgage rates at historic highs, the mortgage stress test has gone up as well. Mortgages in Canada are currently stress tested based on the higher of:
the qualifying rate (currently 5.25%), or
your contract rate + 2%
As of September 20, 2023, the lowest 5-year variable rate available in Canada is 5.95% and the lowest 5-year fixed rate in Canada is 5.24%. As such, both variable rates and fixed rates are now stress tested using your contract rate +2% as this will always end up being higher than the current qualifying rate of 5.25%. Today’s mortgage stress test starts in the mid-7 - 8% range for many borrowers.