There are two key aspects of the stress test that are ripe for tweaking, according to industry observers.

One would be a change in how the minimum qualifying rate is calculated.

“The biggest problem with the stress test is that it relies on a number that can be manipulated, the benchmark 5-year posted rate,” wrote mortgage columnist Rob McLister in a story on Friday.

Since the rate is based on a mode of the Big Six banks’ posted 5-year fixed rates, he argues bureaucrats “can manipulate it by persuading banks (behind the scenes or with public moral suasion) to keep their rates propped up.”

Instead, McLister argues the rate should be based on a rate that adjusts to market conditions.

“One way the government could do that is by basing the MQR (mortgage qualifying rate) on an objective number, like Canada’s 5-year bond yield plus 300 bps, for example. Were that the case this past summer, the MQR would have been in the 4.30% range instead of over 5%, where it’s been stuck for almost two years.”

A second component that has been criticized is the application of the stress test on mortgage switches. That is borrowers who want to switch to a different lender at renewal time, typically in pursuit of a more competitive rate compared to their existing lender.

mortgage stress test tweaks current rules allow borrowers who renew with their current lender to bypass the stress test, which has resulted in higher numbers of borrowers unable to change lenders.

“This policy traps a subset of renewing borrowers into staying with their current lender…” wrote Dave Larock of Integrated Mortgage Planners. “It is disappointing that this regressive policy has not already been rectified because its intrinsic unfairness was highlighted when the stress test was first introduced.”

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