Mortgage Freedom One Year Later: How OSFI’s Rule Change is Reshaping the Lending Landscape

It’s been just over a year since the Office of the Superintendent of Financial Institutions (OSFI) implemented a game-changing revision to Canada’s mortgage rules—eliminating the stress test for uninsured borrowers switching lenders at renewal. And now, in 2025, we’re seeing the ripple effects across the mortgage and real estate landscape.

A Quick Recap: What Changed?

In November 2024, OSFI removed the mandatory mortgage stress test for homeowners with uninsured mortgages who wanted to switch lenders at renewal—provided the mortgage amount and amortization period remained the same. Prior to this, borrowers had to requalify at the greater of 5.25% or their contract rate plus 2%, even if they weren’t increasing their debt.

The original intent of the stress test—introduced in 2016 and tightened in 2018—was to protect the financial system from overleveraged borrowers. But in practice, it trapped many homeowners into staying with their current lenders, often at less competitive rates, simply because they couldn’t pass the stress test a second time.

Where Are We Now in 2025?

The policy shift has made waves. Here’s what we’re seeing one year in:

Increased Competition = Better Rates

With the barrier removed, lenders have ramped up efforts to win over renewing borrowers. The result? More competitive offers, better customer service, and a renewed focus on retention strategies from major banks and alternative lenders alike.

More Homeowners Making the Switch

According to early 2025 data from industry analysts, lender switching among uninsured borrowers has increased by over 30% compared to the previous year. Homeowners are finally able to shop the market without fear of failing a requalification test.

A Wake-Up Call for Lenders

For lenders, the change has been a double-edged sword. On the one hand, it has expanded the market of potential clients at renewal. Conversely, it’s forces institutions to rethink client loyalty and improve their offerings. Those who relied on stress test-induced inertia are quickly adapting—or losing business.

Borrowers Feel Empowered

From a consumer standpoint, this policy has reintroduced a sense of control. Mortgage renewals no longer feel like an automatic renewal formality but an opportunity to negotiate, explore, and make financially savvy decisions.

The Fine Print: Caution Still Required

While this has opened doors, it hasn’t removed all guardrails. Borrowers still need to be cautious. Some lenders may offer attractive initial rates but sneak in hefty fees or less flexible terms. Due diligence remains key.

Also, this change only applies to renewals with no changes in amount or amortization. Homeowners looking to refinance or extend their amortization still need to meet stress test requirements.

What’s Next?

Looking forward in 2025, we may see further reviews of the stress test’s role in new mortgage originations, especially as the housing market adapts to changing interest rate policies and affordability pressures.

OSFI has signaled that it remains committed to a “risk-based” approach, suggesting it will continue to fine-tune regulations in a way that balances borrower flexibility with systemic safety.