BMO Increases Stress Test Buffer for Variable Mortgage Applicants

Toronto, ON — July 16, 2025 — In a quiet but impactful move, BMO (Bank of Montreal) has increased the stress test buffer it applies to variable rate mortgage applicants, causing more borrowers to fall short of approval — even when their income is stable.
ortgage brokers and clients across Canada report that the bank’s internal qualifying rates on variable products are now well above the 5.25% federal minimum, with some scenarios being tested at over 6.6%, depending on loan-to-value ratios and borrower profiles.

“We’ve seen previously approved files come back declined,” said Calgary-based broker Samantha Leong. “It’s not about income changes — it’s about how conservative BMO is being with their risk exposure.”

“This move aligns with BMO’s broader 2025 mortgage strategy, which emphasizes renewals and deeper partnerships with brokers amid rising borrower risk.”

The change appears to be part of BMO’s internal risk adjustment strategy amid ongoing uncertainty about interest rate volatility, Bank of Canada policy, and softening home prices in several urban markets.
BMO has not publicly announced the new buffer policy, but its effect is already being felt. Mortgage insiders say that clients applying for variable rates — particularly those with loan-to-value ratios above 80% — are being qualified at materially higher rates than those applying for fixed terms.
Borrowers concerned about qualifying under stricter conditions may wish to explore hybrid options or consult with a broker who can offer lender comparisons.