Ottawa is currently being called upon to revise the B-20 mortgage stress test, as per TREB. Combined with rising interest rates and the mandated stress test, TREB’s CEO John DiMichele says the B-20 is ruinous for the economy.
“One area that needs to be revisited is the imposition of the OSFI-mandated two percentage point mortgage stress test. While we saw buyers return to the market in the second half of 2018, we have to have an honest discussion on whether or not today’s homebuyers are being stress tested against rates that are realistic. Home sales in the GTA, and Canada more broadly, play a huge role in economic growth, job creation and government revenues each year. Looking through this lens, policymakers need to be aware of unintended consequences the stress test could have on the housing market and broader economy.” says DiMichele.
Mortgage stress tests will also be used for mortgage borrowers due for renewal if they shop around for better rates, but if they choose to remain with their current lender, they’ll be at the latter’s mercy.
“People will have to stay where they are from a banking standpoint and also from a housing standpoint because they can’t move up the housing ladder,” said Shawn Zigelstein, a real estate agent. “I’ve had clients who have had to qualify at $750 to $1,000 more a month than their actual payments. This reduces their affordability, which means that they can’t buy the property they want and have to stay put, which means the people who wanted to buy their house won’t be able to.
“Qualification and what you can afford are two very different things.”
For more on this topic, visit: https://www.repmag.ca/news/pressure-mounts-on-ottawa-to-revise-mortgage-rules-254153.aspx?utm_source=Pinpointe&utm_medium=20190208&utm_campaign=REP-Newsletter&utm_content=5E820814-6993-48E6-A9E5-F4B88518E65F&tu=5E820814-6993-48E6-A9E5-F4B88518E65F