Greater Vancouver’s real estate board calls on Ottawa to ‘tweak’ mortgage stress test
The Real Estate Board of Greater Vancouver is calling on Ottawa to revisit the mortgage stress test.
The board’s president Phil Moore questions whether the mortgage stress test introduced last year is still needed.
“It disqualifies people who can afford the payments, yet can’t buy a home that their family needs because of the harshness of the stress test requirements,” Moore said.
He added the board believes in responsible lending but there is a balance and the test has caused more harm than good in Vancouver’s hot housing market.
” It’s actually forcing more buyers in the lower price range, making that price range more competitive.”
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He adds it’s now a common occurrence to see deals fall through as a result of the test and there are many who can actually afford payments despite the requirements.
“We know that rising interest rates are already affecting people’s ability to qualify but the stress test is compounding this issue,” said Moore.
On Monday, the board reported home sales in January fell almost 40 per cent in the region compared to the same month a year ago.
Toronto’s Real Estate Board is also asking Ottawa to take a second look.
The test is mandated through the Office of the Superintendent of Financial Institutions (OSFI).
A statement from OSFI said the stress test ensures a borrower does not stretch their borrowing capacity to its maximum.
“Borrowers face different risks that could impair their ability to pay their mortgage: changes to income, changes to expenses, changes to health. It is prudent to have a buffer for these changes as well,” reads part of the statement.
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