A buyer, Mark, is applying for a new mortgage in Lethbridge for $350,000. The current qualifying rate (stress test rate) set by the Office of the Superintendent of Financial Institutions (OSFI) is 5.25%, and the contract mortgage rate offered by his lender is 4.75%. Which interest rate will be used to calculate Mark's mortgage eligibility under the stress test rules?

Question: A buyer, Mark, is applying for a new mortgage in Lethbridge for $350,000. The current qualifying rate (stress test rate) set by the Office of the Superintendent of Financial Institutions (OSFI) is 5.25%, and the contract mortgage rate offered by his lender is 4.75%. Which interest rate will be used to calculate Mark's mortgage eligibility under the stress test rules?

Answer options:

• 4.75%
• 5.00% ✅ 5.25%
• The average of 4.75% and 5.25%

Correct answer: 5.25%

Explanation: Under the mortgage stress test rules for uninsured mortgages, borrowers must qualify at either the greater of the Bank of Canada's 5-year benchmark rate or the contract mortgage rate plus 2%. For insured mortgages, it's the greater of the Bank of Canada's 5-year benchmark rate or the contract rate. In this case, the specific stress test rate provided (5.25%) would be used to assess affordability.