Minister of Finance Bill Morneau has announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages.

Now Instead of the Bank of Canada 5-Year Benchmark Posted Rate, the new benchmark rate will be the weekly median 5-year fixed insured mortgage rateplus 2%. These changes will come into effect on April 6, 2020.

The new benchmark rate will be published on a Wednesday and come into effect the following Monday.

Morneau has been under pressure to ease up on stress tests that require home buyers to prove they can handle payments at about two percentage points above the contracted rate. The government’s qualification rules were matched by the country’s Banking Regulators on non-insured mortgages in 2018, prompting realtors to warn the measures were too heavy-handed, and disproportionately hurt young home buyers.

The minimum qualifying rate for insured mortgages will now be the greater of the borrower’s contract rate, which is the mortgage interest rate agreed to by the lending institution and the borrower; or the new benchmark rate.