The government's mortgage stress test (a.k.a. "MQR") kept borrowers and lenders mostly out of trouble as rates soared from March 2022 to June 2024. It was instrumental in reducing the buildup of overborrowing, at least at federally regulated prime lenders.

Now, it's under the microscope. Could it go away altogether?

Recent words from OSFI head Peter Routledge have hinted at just that.

As part of the government's ongoing saga to house Canada's newcomers, they've decided to bring back default-insured refinances.

Insured refis re-launch on January 15, 2025, after policymakers killed them off in 2016.

But there's a catch...

Mortgage applicants often worry about committing to a rate in a downtrending rate market. Many fear that they'll lock in only to miss out on a chance for further rate improvement.

More skeptical customers might go so far as to picture their lender as a mustache-twirling villain, gleefully pocketing rate drops while leaving them in the dark.
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CMHC says Canada built 30,000 fewer homes last year thanks to lofty borrowing costs. Turns out, steep rates caused small-fry investors, who account for about half of condo construction funding, to run for the hills faster than Sean "Diddy" Combs from a truth-telling contest.

This spells trouble for one simple reason: "Canada has built a structural deficit in housing supply that can only be remedied through extensive investment by the private sector," CMHC reported this week. In fact, despite all the government home-building hoopla, the private sector shells out no less than 95% of home-building capital.

When it comes to condo apartments, it is individual investors who provide "the majority of the funding to build," CMHC Deputy Chief Economist Aled ab Iorwerth tells MLN. So, given that most developers need at least 70% of units pre-sold to secure financing and start construction, the exodus of small investors has thrown a wrench in the housing machine.

Canadian fixed mortgage rates are so tied to U.S. monetary policy, they should probably ask for a green card.

Most borrowers don’t realize how important this cross-border relationship is, so a touch of Fed history offers enlightenment.

Looking at the six easing cycles prior to the pandemic, what we learn is that once the Fed makes its initial rate cut: