Keeping Track of Mortgage Rule Changes

If national mortgage rules recently changed or are going to change, it's listed here, all in one place.

Here's the latest on what can affect your mortgage plans today.

Nov 24, 2024

Updated April 14, 2025

Up on the (mortgage rule) board.

A number of new mortgage rule changes have gone from whiteboard to reality — some have been pushed for by the mortgage industry for months or years.

Changes can come from a few places, affecting how traditional banks and lenders treat your mortgage qualification and terms. And they can happen suddenly or be 'proposed' (which may or may not see the light of day).

Usually, the changes address an issue — such as current economic conditions, housing market factors, banking sector concerns, consumer rights, or (even) political pressure.

This blog tracks important recent or proposed changes.

Let's take a look at recent mortgage rule activity.

National mortgage rule changes can come from the following entities:

CMHC (Canadian Mortgage and Housing Corporation), a federal crown corporation that provides mortgage default insurance
The federal government, through budgets tabled or in coordination with the Minister of Finance
OSFI (Office of the Superintendent of Financial Institutions), which governs the Canadian banking sector and sets the required mortgage stress test for borrower qualification

A list of recent mortgage rule changes.

These changes have either happened or are scheduled to take effect.

August 1, 2024
Extend to 30-year amortization for first-time buyers of new-builds

The federal government allowed a 30-year extension for first-time buyers only for insured new-build mortgage purchases.

August 1, 2024
Premium surcharge added to first-timer 30-year extension rule

The premium surcharge added by CMHC is in response to the new 30-year extension rule, which takes into consideration the capital impact of these mortgage-length extensions while also supporting CMHC’s mandate to promote housing affordability.

November 21, 2024
Removal of stress test for straight, stand-alone uninsured renewal switches

For these uninsured mortgage switches at renewal, OSFI removed the federally-required mortgage stress for bank qualification, allowing more homeowners to find a better deal. The stress-test requirement isn't required for insured switches (a rule that was re-highlighted in October 2023).

December 15, 2024
Insured mortgage changes

These rules seek to help more home buyers enter the real estate market by addressing the current housing market realities of higher home prices and interest rates.

An increase in the home-price cap from $1M to $1.5M for insured mortgages (for primary and secondary home purchases, not investor purchases) will allow less than a 20% down payment in more expensive markets and access to lower insured mortgage rates.
All first-time and all new-build buyers can extend an insured mortgage to 30 years from the standard 25-year amortization, which will help lower mortgage payments and improve stress-test qualification. This rule expands on the 30-year insured amortization exception rolled out on August 1 (above).
A 30-year insured mortgage comes with an added insurance premium.

January 15, 2025
Insured refinances for secondary suites

Insured refinances haven't been available to Canadian homeowners since 2016 (originally removed to discourage the ability to take on more mortgage debt). This new allowance aims to encourage on-the-property density, ideally helping to alleviate the housing and rental supply crunch while offering a potential added (rental) income source for budget-challenged owners.

Eligible homeowners will be able to access an insured refinance for up to 90% of their 'improved property' value (capped at a $2M home value) for construction funds.
This product can be extended to a 30-year amortization (an additional insurance premium will apply).

Quarter 1 of 2025
LTI cap on uninsured mortgages.

OSFI announced in March, 2024, that in Q1 of 2025, banks will have a cap placed on the number of new uninsured mortgages in their portfolio that are more than 4.5 times a borrower's annual gross income (the cap will differ for each lender).

This new rule could impact first-time home buyers the most, shrinking how much home they can buy based on their income (in addition to the TDS ratios already in place) when getting a mortgage approval through a traditional lender.

As rates fall (when and if they do), this regulation has the capacity to reduce single-property homeowners in Canada and favour higher-income earners and property investors, especially in higher-priced markets such as Vancouver and Toronto. (Renewals and refinances aren't included in the lender LTI cap.

Mortgage Rule Proposals

In October 2024, OSFI quietly mentioned (in a fireside chat, no less) that the above bankside LTI cap regulation may eventually replace the borrower-side mortgage stress test entirely for uninsured mortgages by the end of 2025 or the start of 2026.

How often are rule changes proposed?

The federal government tables potential budget changes bi-annually. Read through their latest housing measure proposals.

OSFI reviews mortgage rules at least once per year (usually in December), and may propose changes to address current issues or provide forward guidance.

Once it consults with the industry, successful proposals may be formalized, which can take weeks to months to become official (depending on how easy it is for lenders to implement the changes).

Pushed around by outside pressure?

The federal government may enact certain mortgage rule changes as part of an election platform or recent promise, though doing so without industry consultation (i.e. a move to secure more votes or public favour) can lead to detrimental economic impact.

The banking governance body, OSFI, typically doesn't respond to political pressure — revising or proposing rules based on how it perceives the conditions, needs, or security of the banking industry.

However, OSFI's regulations aren't always popular with all players in the government or mortgage industry. This 'resistance' can lead some experts (or politicians) to think that OSFI may implement or reverse changes based on the feedback (it rarely does).

A good example of resisting politics can be seen in OSFI's 'sudden' mortgage rule change (announced September 2024) to drop the required stress test on uninsured renewal switches. The mortgage industry (and the federal government) had been calling for this change for years, and more intensely since prime rate-drops were finally anticipated. But far from succumbing to outside pressure, this rule change instead was based on forward guidance for the economic climate and declining rates.

Looking for more first-time home buyer changes?

For changes to federal government first-timer savings or tax incentives or programs, please visit our First-Time Home Buyers page.

Mortgage Stress Test

OSFI dictates that regulated financial institutions must use the federal mortgage stress test when approving most mortgage applications, such as for buying a home or refinancing. Lenders are able to forego the stress test requirement when approving a straight renewal switch (vs. a refinance) for insured and uninsured mortgages (though not all may choose to do so).

Currently, the mortgage stress-test rate is a minimum of 5.25%, or 2.0% above your contract rate, whichever is higher. Read more here.

What mortgage rules changed in 2023?

OSFI made no changes to the stress test in 2023. However, it did:

Require lenders to hold more capital due to amortizing fixed-payment variable-rate mortgage products.
October 2023 – Highlight a rule buried in the fine print that lenders can drop the stress-test requirement for eligible insured mortgage renewals.
November 2023 – Limit the borrowing room on re-advanceable home equity lines of credit to a maximum of 65% loan-to-value rather than the 80% LTV previously allowed.

It mulled other changes that didn't go through, such as:

Raise debt-service ratios further (used to qualify mortgage applications) — many lenders have tightened these limits on their own
Reduce or eliminate case-by-case lender exceptions to the stress-test regulations (based on application strength)
Changes to the stress test itself (no changes made)

More past mortgage rule changes:

The rules around mortgages are subject to change, and there have been several changes in the past few years, including:

Confused By Your Rate Options? 2016
Refinance Rule Changes 2016
CMHC Tightens Rules 2020
CMHC Loosens Rules 2021
Tougher Stress Test Rules June 2021 — revised affordability rules set out by the federal government
Say goodbye to your stress test rate of 5.25% 2022

Fact: In 2021, the mortgage stress test minimum was increased to 5.25% (or your contract rate plus 2.0%, whichever is higher) to improve the margin of 'payment safety.' At the time, rates were at historical lows.

OSFI sentiment assumes that home buyers seek to max out their affordability.

"OSFI seems to have an assumption that Canadians will buy as 'much home' as possible," Dan Eisner, True North CEO, observes. "But we haven't really seen that with our clients." From what he sees, Canadians are very diligent about not taking on too much mortgage.

Dan explains further:

"Our True North and THINK Financial clients often come to us with a very good idea of the size of mortgage and payments they can handle. Even if we provide them with higher numbers based on their details, they'll often say, 'This is what I feel I can afford.'

"Canadians, for the most part, aren't going to buy a house unless they feel secure in their jobs and situations. If someone is nervous about their income, they typically don't buy a home until they feel more secure. No one wants that mortgage payment stress, and our clients tend to make relatively prudent decisions to avoid it."

Listen to Dan Eisner, True North Founder and CEO, discuss OSFI's mortgage stress test with host Ben O'Hara-Bryne on the January 13, 2023 podcast, A Little More Conversation.

We rate-squeeze the lenders for you (in a friendly way to help you save).

Whether you're a first-time or next-time buyer, or have an insured or uninsured mortgage, getting your best rate for your situation can help you save thousands.

Our expert, friendly brokers shop the lenders and options for you, securing deals you may not have known existed.

We can also provide unbiased advice on strategies to improve your home affordability and mortgage approval numbers.

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