The four-point plan that Andrew Scheer’s Conservative Party laid out this week with the stated aim of making home ownership more affordable for Canadians earned immediate praise from the country’s largest realtor group.
The plan, announced on September 23rd with the federal election less than a month away, includes several modifications to the mortgage stress test. The clearest proposed modification would remove the existing requirement that homeowners who are switching lenders must pass the test again when their mortgages come up for renewal.
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Scheer’s Conservatives also have proposed increasing amortization periods on insured mortgages to 30 years for first-time homebuyers, up from the 25-year maximum introduced by former Finance Minister Jim Flaherty and the Harper Conservative government in 2012.
The Canadian Real Estate Association (CREA) said the proposed new measures would “make it easier for first-time homebuyers to buy a home.”
“REALTORS® have long asked for common-sense solutions designed to help Canadians to purchase a home of their own,” says Jason Stephen, President of The Canadian Real Estate Association, in a media release. “The measures announced today by the Conservative party include suggestions we’ve been making to policymakers, such as fixing the mortgage stress test and removing it for mortgage renewals.”
The announcement clarifies Scheer’s previous public commitment to “fixing” the mortgage stress test.
Speaking to the Canadian Home Builders Association (CHBA) in May, Scheer indicated he would review the stress test that policymakers under the Liberal government introduced in January 2018 if his party forms government in October. In his CHBA remarks, Scheer criticized the “unintended consequences” of the new stress test policy and zeroed in on the provision that requires homeowners to pass the test again when switching mortgage lenders.
“That has the consequence of the bank that you’re with kind of having you over the barrel,” he said.
Scheer’s Conservatives and CREA are not the only groups that have been critical of the mortgage stress test and the Liberals’ general approach to housing policy.
Economist Will Dunning of Mortgage Professionals Canada has issued a similar critique of the policy, noting in June that modifications could be made to “reduce the harm and the risks” they’ve exposed Canadian homebuyers and owners to. Mortgage Professionals Canada also issued a statement this week welcoming Scheer’s proposal.
For their part, federal Liberals defended their policies and criticized Scheer’s proposal as “reckless” and one that will “add more debt and instability to the housing market.”
Can you pass the Canadian mortgage stress test? Read our Buyer Guides resource on how it all works.