Starting November 21, 2024, homeowners renewing their mortgages with a new lender will no longer need to pass the mortgage stress test. Previously, this test required homeowners to qualify for a mortgage at a rate 2% higher than what was being offered, aiming to protect homeowners from financial challenges in case interest rates rose in the future.
In recent years, the stress test proved its worth, as unexpected rate hikes caused financial strain for many. However, applying this requirement to homeowners who are simply renewing their mortgage with a new lender didn’t make much sense. After all, they’ve already qualified for and are managing an existing mortgage.
For many homeowners, the high rates made switching to a new lender nearly impossible, limiting their options. When your current lender knows you can’t qualify elsewhere, they might not offer the most competitive rate at renewal.
Fortunately, with this new rule coming into effect, homeowners renewing their mortgages will no longer be bound by the stress test when shopping for a better deal with a new lender. Even if your current lender offers a rate that seems competitive, it’s always worth comparing offers from other institutions before committing to a renewal. This change gives you more flexibility to explore better options and ensure you get the best deal available.