According to an expert, that stress test might get a bit more stressful.
On September 7, the Bank of Canada announced that it is raising the policy interest rate by 0.75%, bringing it to a whopping 3.25%.
This is the fifth consecutive interest rate hike this year, and the bank's announcement suggests more increases will likely be coming.
The financial regulator stated that this increase in policy interest rate is aimed at combatting inflation in Canada.
If all of this is making you worry about affordability in your life, Narcity spoke with a financial expert to understand how this will affect Canadians and what can be done to avoid the brunt of it.
According to Leah Zlatkin, an expert from LowestRates.ca and licensed mortgage broker, one of the groups most affected by this increase is Canadians who have taken out a variable-rate mortgage.
These are mortgage rates that change based on the policy interest rate and the condition of the Canadian economy.
This means that for every $100,000 in a variable mortgage, homeowners could see an approximate increase of $36 a month, according to Zlatkin. That can really start to add up!
The other group that will be feeling this increase the most is any Canadian hoping to qualify or re-qualify for a mortgage.
"Typically, rates are floating around 3.7% on a variable, but a .75% increase means they will need to qualify at 4.45%," explained Zlatkin.
"This is before even taking into account the stress test, which is an additional 2%, meaning they are looking at 6.45% in order to qualify."
However, all hope is not lost. Zlatkin provided some tips that could help save cash during moments like this.
Her first tip is to pay as much of a lump sum toward your mortgage as possible.
"This allows [you] to pay less interest long-term with more principal down," she said.
However, it's less common to have a lump of cash you can throw down at a moment's notice, so she offers some additional advice.
"It's a good idea to set aside more cash for future payments to ride out the storm," said Zlatkin. "[You] should also consider speaking with a professional to see about options for changing products or switching amortization periods."
But, she mentions that before you make any moves, you should consult the terms and conditions of your mortgage to "understand what the penalties might be."
While the inflation rate has gone down from its June high of 8.1% to 7.6% in July, it's still far off from the Bank of Canada's goal of 2%.
Experts believe that the Bank of Canada may increase prices again later this year, with the next hike expected on October 26.
This article's cover image was used for illustrative purposes only.