Under OSFI Guideline B-20 for federally regulated financial institutions, which of the following is NOT a mandatory component of the stress test for uninsured mortgages?

Question: Under OSFI Guideline B-20 for federally regulated financial institutions, which of the following is NOT a mandatory component of the stress test for uninsured mortgages?

Answer options:

• Using a qualifying interest rate that is the greater of 5.25% or the contract rate + 2%.
• Evaluating the borrower's ability to service the debt if interest rates rise.
• Assessing the borrower's credit score and credit history. ✅ Applying a minimum Loan-to-Value (LTV) limit of 80% for conventional mortgages.

Correct answer: Applying a minimum Loan-to-Value (LTV) limit of 80% for conventional mortgages.

Explanation: OSFI B-20 primarily focuses on income stress testing via the qualifying rate (options A and B). While creditworthiness (option C) is crucial for any mortgage, OSFI B-20 itself does not mandate a specific minimum LTV limit of 80% for conventional mortgages; rather, the 80% LTV is the threshold defining a conventional mortgage typically not requiring CMHC insurance.