The Office of the Superintendent of Financial Institutions (OSFI) announced that effective June 1, the minimum qualifying rate for uninsured mortgages (i.e., residential mortgages with a down payment of 20 percent or more) will be the greater of the mortgage contract rate plus 2 percent or 5.25 percent.

OSFI will review and communicate the qualifying rate at a minimum annually, every December, well in advance of the high-volume housing spring season.

Following closely to the OSFI's statement the Deputy Prime Minister and the Minister of Finance, Chrystia Freeland released another statement that aligned the uninsured and insured mortgages in an endeavour to heighten the stress test. The statement can be read here.

"For many Canadians, the most important investment they will ever make is the purchase of a home. Increasingly, however, that dream is becoming unaffordable and unattainable. The recent and rapid rise in housing prices is squeezing middle-class Canadians across the entire country and raises concerns about the stability of the overall market."

“With today’s official confirmation from OSFI of the new minimum qualifying rate for uninsured mortgages, the federal government will align with OSFI by establishing a new minimum qualifying rate for insured mortgages, subject to review and periodic adjustment, which will be the greater of the borrower’s mortgage contract rate plus 2 percent or 5.25 percent. This will apply to insured mortgages approved on June 1, 2021, or later."

When these changes go into effect, the maximum mortgage for a buyer will drop between 4-4.5% more or less. For a buyer family with an annual income of $150,000, the maximum available mortgage amount will be close to $38,000 lower than that at 4.79%.

For those, who have preapproved mortgages the rates will stay the same as long as they have an accepted legal agreement of purchase and sale before June 1, 2021. For others, the preapprovals will be reassessed at a 5.25% qualifying rate.

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