For the second time in just under a full month, the Toronto Real Estate Board has called on Ottawa to review the B-20 mortgage stress test.
While reporting February sales figures—they’re down 2.4% year-over-year—TREB President Garry Bhaura took a shot at the Office of the Superintendent of Financial Institutions while also alluding to the upcoming federal election.
“The OSFI mandated mortgage stress test has left some buyers on the sidelines who have struggled to qualify for the type of home they want to buy. The stress test should be reviewed and consideration should be given to bringing back 30-year amortizations for federally insured mortgages. There is a federal budget and election on the horizon. It will be interesting to see what policy measures are announced to help with home ownership affordability,” Bhaura said in a statement.
Added Jason Mercer, TREB’s director of market analysis and service channels:
“Home sales reported through TREB’s MLS System have a substantial impact on the Canadian economy. A study conducted by Altus for TREB found that, on average, each home sale reported through TREB resulted in $68,000 in spin-off expenditures accruing to the economy. With sales substantially lower than the 2016 record peak over the last two years, we have experienced a hit to the economy in the billions of dollars, in the GTA alone. This hit has also translated into lower government revenues and, if sustained, could impact the employment picture as well.”
Christopher Alexander, REMAX Integra’s vice president and regional director for Ontario-Atlantic Region, says that while he can appreciate OSFI’s reticence in standing idly by while Canadians continued accruing more debt, he says the situation has changed dramatically.
“They’re saying interest rates will only rise 1% over the next few years, so why are you still asking people to qualify at 2%?”
Alexander says B-20 has transformed from a prudent measure into a monumental hindrance.
“I strongly believe and support responsible lending and debt management, but I think that when the stress test came in it served a purpose and now it’s starting to do more harm than good,” he said. “We need to find a way to incentivize first-time homebuyers to get into the market and incentivize existing mortgage holders to pay down their debt.”