Changes to Canada’s mortgage stress test could be coming, depending on the outcome of the October federal election.
Official Opposition Leader Andrew Scheer says he’s “absolutely committed” to reviewing the stress test that policymakers introduced in January 2018 — though that hinges on the head of the federal Progressive Conservative defeating Liberal Prime Minister Justin Trudeau.
Scheer’s remarks were delivered this past Friday in Niagara at the Canadian Home Builders’ Association’s National Conference.
“Clearly there are some major unintended consequences that this new policy has had,” Scheer continued.
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The new rules Scheer was addressing require uninsured-mortgage applicants to qualify at a rate 200 basis points higher than what their federally regulated lender is offering.
Scheer notes it’s important to make sure credit markets aren’t exposed to risk that leads to major problems. But he also emphasized first-time homebuyers who can keep up with mortgage payments shouldn’t be shut out of the market.
Under the current stress test rules, existing borrowers looking to switch lenders are required to pass the stress test again, even if they’ve already done so with their current lender.
“I don’t see the public policy goal that that achieves — having that provision in — so that’s something that we’re committed to removing,” says Scheer.
“That has the consequence of the bank that you’re with kind of having you over the barrel,” he adds.
The prime minister hopeful is not alone in this view.
Earlier this year, Phil Moore, president of the Real Estate Board of Greater Vancouver, recommended the exact change Scheer is now proposing.
“They’re held hostage by the first bank,” Moore told Livabl, referring to how having to face the stress test again makes it harder for borrowers to shop around for better rates. “Now, that’s not fair to Canadians.”