B.C. real estate board urges feds to revisit mortgage stress test

Stress test reducing people’s purchasing power by as much as 20 per cent, BCREA says

B.C.’s real estate board is joining the chorus of voices across the country urging the federal government to revisit the year-old stress test rule that has been criticized for eroding housing affordability for many.

The B-20 stress test was implemented in January 2018 to help cool down the red-hot housing market in Canada’s major cities. Would-be homebuyers now have to qualify at an interest rate two percentage points above the rate they negotiate with the bank.

The BC Real Estate Association says the test is reducing people’s purchasing power by as much as 20 per cent.

“We would like to see a review and reconsideration of the current mortgage underwriting ‘stress test,’ as well as a return to 30-year amortizations for federally insured mortgages,” chief executive officer Darlene Hyde said in a news release Tuesday.

“These rules must be changed now before B.C. families are left further behind.”

READ MORE: Mortgage test, high supply to keep cooling B.C. housing prices in 2019, report says

READ MORE: Real estate board calls on Ottawa to revisit mortgage stress test

The association has pointed to the stress test as the leading reason behind dipping home sales since last summer. Sales have dropped 45 per cent in Vancouver since 2018, compared to 18 per cent nationally.

The average price of homes in the Lower Mainland nearly doubled, while it remained mostly steady across the province, up just 0.5 per cent to $716,100, in the first quarter of 2019.

Housing analysts predicted in late December that prices in the Lower Mainland will rise by just 0.6 per cent this year, compared to five per cent in 2018. If true, a home will cost an average of $1.3 million by the end of the year.

Hyde said the test is having a negative impact on other facets of the economy, such as retail spending, as home equity declines in line with decreasing benchmark prices.

The Canadian Home Builders’ Association has also said the mortgage rules may force builders to pull back, leading to slower growth of the housing stock and yet another supply crunch and higher prices down the road.


@ashwadhwani
ashley.wadhwani@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Chemainus Thrift Shop undergoing renovations to improve efficiency

Customers won’t see more room for goods, but office space and storage an important focus

North Cowichan looks to keep tax increase below 3%

Finance team asked to find ways to drop increase to 2.95%

Ladysmith mayor considered running federally, decided against it

Aaron Stone filed papers with Nanaimo-Ladysmith NDP to be vetted as a candidate

Roundabout plans at River Road in Chemainus moving forward

Land issues still being resolved before details revealed to the public

The good, bad and the unknown of Apple’s new services

The announcements lacked some key details, such as pricing of the TV service

UPDATED: Three dead in Surrey crash: police

Single-vehicle crash occurred around 10:30 a.m., police remain on-scene

Eviction halted for B.C. woman deemed ‘too young’ for seniors’ home

Zoe Nagler, 46, had been given notice after living in the seniors complex in Comox for six years

Is it a homicide? B.C. woman dies in hospital, seven months after being shot

Stepfather think Chilliwack case should now be a homicide, but IHIT has not confirmed anything

Coroner’s inquest announced for Victoria teen’s overdose death

Elliot Eurchuk was 16 years old when he died of an opioid overdose at his Oak Bay home

Military officer accused of sexual misconduct, drunkenness in B.C., Alberta

Warrant Officer Jarvis Kevin Malone is charged under the National Defence Act

Stranger climbs onto B.C. family’s second-floor balcony, lights fire in barbecue

Incident in Abbotsford terrifies family with two-year-old boy

Howard the giant gnome finds new home on Vancouver Island

Iconic attraction will move from Nanoose Bay to Galey Farms in Saanich

Harbour Air to convert to all-electric seaplanes

Seaplane company to modify fleet with a 750-horsepower electric motor

Most Read