The Office of the Superintendent of Financial Institutions (OSFI) announced as part of their annual review on Thursday that the minimum qualifying rate for uninsured mortgages will remain the greater of the mortgage contract rate plus two percentage points or 5.25 per cent.

While the Bank of Canada hiked its benchmark interest rate seven times in 2022, taking its rate to 4.25 per cent – its highest level since 2008, OSFI has decided that the current qualifying level remains appropriate.

“Sound mortgage underwriting includes a margin of safety that ensures borrowers will have the ability to make mortgage payments in the event of negative financial shocks,” OSFI said. “In an environment characterized by rising mortgage interest rates, it is prudent that lenders continue to test borrowers for adverse conditions.”

OSFI also said it will launch a review of the stress test and other mortgage underwriting standards in January. The regulator said it expects to leave the stress test in place after its review, “although the economic environment could result in a more immediate change.”

Deputy Prime Minister and Finance Minister Chrystia Freeland said in a statement Thursday that Ottawa’s test for insured mortgages will also remain unchanged. “Ensuring the stability of Canada’s housing market is essential to protecting Canadians and to upholding Canada’s financial and economic resilience,” said Freeland. “We will continue to monitor the housing market and review the insured minimum qualifying rate as warranted.”