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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Maple Ridge 2020 BC Summer Games organizers disappointed but proud

Should be extra-prepared for the 2024 Summer Games once it comes

About 1,300 BC Hydro customers without power in Maple Ridge

A tree has fallen across electrical wires

WEATHER: Environment Canada forecasts snow for Ridge Meadows

Wednesday will see mostly sun and cloud

Maple Ridge HandyDART driver worried about safety with COVID-19

Union says operators need more personal protective equipment

Ridge Meadows RCMP release year end review video

List detachment’s successes throughout 2019

‘We will get through this’: B.C. sees new COVID-19 death, but 57% have recovered

A total of 1,066 people have tested positive for the novel coronavirus

Association launches French-language games, online tools for families learning at home

Games, culture and vocabulary included in new virtual resources

‘There can be no ambiguity’: Travellers brought home to B.C. must self-isolate

Health Minister Adrian Dix said the mandatory isolation must be abided by

55+ BC Games cancelled amid COVID-19 concerns

Greater Victoria set to host 2021 event

BC Hydro offers three-month bill ‘holiday’ for those affected by COVID-19

Industrial customers can defer half of their power bills

VIDEO: Dog missing in Lower Mainland since winter sees his family again for the first time

Aldergrove helped find Buster, says dad, who has now witnessed ‘the power of social media’

Some April Fool’s Day jokes bring much-needed laughter; others tone deaf to COVID-19

Police are warning the public not to use the ongoing pandemic as a punchline

Canada’s 75% wage subsidy is coming, but not for several weeks: finance minister

Subsidy will cost Canada $71 billion, but push down cost of emergency benefit, Morneau said

Call before you dig into spring projects during isolation: BC 1 Call

BC 1 Call gives free checks for utilities in the area of a desired outdoor project

Most Read