![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2018\/07\/crea-stress-compressed.jpg\")
<\/a><\/p>\nPhoto: James Bombales<\/em><\/p>\n It\u2019s been over six months since the new mortgage stress test rolled out across Canada with the aim of ensuring borrowers would be able to handle higher interest rates. However, one expert says the mortgage regulation needs to be improved to mitigate the impact on home buyers. \u00a0<\/span><\/p>\n On January 1, the Office of the Superintendent of Financial Institutions (OSFI) implemented stricter mortgage rules that require uninsured home buyers to pass a \u201cstress test\u201d in order to qualify for mortgage financing with one of Canada\u2019s federally regulated banks.<\/p>\n But,Gregory Kump, chief economist at the Canadian Real Estate Association (CREA), argues that despite its intended effect on borrowers, the stress test only safeguards federally regulated financial institutions (FRFIs).<\/span><\/p>\n\n To avoid the stress test, home buyers can opt for non-federally regulated financial institutions (non-FSFIs), but they will likely be charged higher lending rates for mortgages compared to FRFIs.<\/span><\/p>\n \u201cSimply put, OSFI\u2019s new stress test means some borrowers are likely taking on debt that is harder to manage than would be the case in a world without the stress test. This means financial risks are merely being shifted away from FRFIs and toward home buyers and non-FRFIs,\u201d Klump writes in a <\/span>note<\/span><\/a>, published Tuesday. <\/span><\/p>\n The economist writes that OSFI\u2019s motivation for the stress test is to slow mortgage credit growth. He adds that the federal organization is worried about risks to Canada\u2019s financial system, including rising interest rates and the next economic recession.<\/span><\/p>\n