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RSS FeedsHow the federal budget could tweak the mortgage stress test
(The Star Food)

 
 

17 march 2019 23:55:43

 
How the federal budget could tweak the mortgage stress test
(The Star Food)
 


When the federal government rolled out a mortgage “stress test” last January, it was meant to keep Canadians from taking on more real estate debt than they could afford.A year in, some critics have said it’s pushed home ownership out of reach for younger Canadians and other first-time home buyers, and would like the test tweaked in Tuesday’s federal budget. Even Finance Minister Bill Morneau has made vague suggestions in recent months that the Liberals will look at options to make housing more affordable.Defenders, however, say the stress test, introduced as part of Regulation B20, is working exactly as it should.“They had to protect borrowers,” said John Andrew, a real estate professor at Queen’s University’s Smith School of Business. “Everybody was borrowing every possible dollar they could.”Those borrowers “were going to be in trouble if rates started rising,” added Andrew.Read more: Budget’s housing affordability changes to focus on supply, demand, regulation Mortgage stress test will leave home buyers coldEverything you need to know about beating a mortgage stress testIn a speech last month, a senior official at the agency that imposed B20 defended the stress test.“The escalating cost of homeownership in Canada, and its knock-on effects to the economy and to society, is a problem — and it’s a problem that is proving very challenging to address,” said Carolyn Rogers, with the Office of the Superintendent of Financial Institutions (OSFI). “But the answer to this important problem cannot be more debt,” she said. “Particularly, it cannot be more consumer debt, fuelled by lower underwriting standards.”The stress test, implemented by OSFI, means that borrowers with a down payment of more than 20 per cent have to show they can afford a mortgage (or home equity line of credit) at two percentage points above the rate being offered, or the Ban ...


 
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