Alberta municipalities are looking at housing prices and scratching their heads over what all the fuss was about with the federally regulated mortgage stress test. It’s one of the pocket-book issues expected to come up a lot this fall, heading to the Oct. 21 election.
The Alberta Urban Municipalities Association (AUMA) will have a motion on the fall agenda at its September meeting. Councillor Mike Nickel plans to have something before Edmonton city council later this month.
In a text, Nickel confirmed his wording will be slightly more urgent than what Calgary city council passed in February, where Councillor George Chahal’s motion wound up seeing a letter written to Premier Jason Kenney and Prime Minister Justin Trudeau to have the rules changed.
The stress test, brought in by Canadian Mortgage and Housing Corporation, known as guideline B-20, Residential Mortgage Underwriting Practices and Procedures, from the Office of the Superintendent of Financial Institutions, is to guard against prospective home buyers who have a less-than-20 per cent down payment from getting in over their head.
It’s seen as a remedy for financial hardship in Canada’s two hottest housing markets.
Brooks Mayor Barry Morishita, the president of the AUMA, said they’re investigating the status of both Alberta’s credit unions, and the ATB.
“Apparently they both can exempt themselves from that, so we’re encouraging anything that helps make the market a little bit more friendly in Alberta.”
Home buyers are evaluated on whether they could pay their mortgage if interest rates went up by two per cent above their current rate.
“This is a really typical approach of government to use a sledge hammer instead of a scalpel to fix things,” Morishita said.
“Alberta’s market wasn’t messed up. Our economy is tougher so we deal with those things but the actual real estate market on its own was not out of line like it was in Vancouver or Toronto. Now we have rules that impose a different standard for markets that are just fine.”
The mayor said he has an example in his own family. A second grandchild has arrived, and the family wants to move into a larger home, but can’t.
“Under the stress test rules, they probably won’t even get approved for the next level so they can buy the bigger house even if their house sells. So they’re stuck in Catch-22 position. They can’t go anywhere.
“They need the space. They can afford it. They’re both teachers.”
Morishita said AUMA members are complaining from all parts of the province because of the trickle-down effect.
“If you don’t have this flow of money, then everything else stops as well. You don’t get renovations. You don’t get people buying furniture. You don’t have any of that stuff.
“It just stagnates so many other things because you’re not having that natural progression in the marketplace that we’ve had for years.”
Lobbying has happened with both orders of government, however the AUMA president said the group has received sympathy, but not a firm direction from anybody on what kind of remedy could come.
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