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

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

Students from Summerland’s Okanagan College often posed for photographs on the Big Rock. The rock was on the northern slope of Giant’s Head Mountain. (Photo courtesy of the Summerland Museum)
Summerland’s Big Rock had been deposited during last ice age

Rock was once a prominent feature on Giant’s Head Mountain

The Fortunato family received the Bill Neilson Volunteer of the Year Award for their efforts with the Summerland Skating Club. (Contributed)
Summerland Skating Club members recognized for efforts

Three awards presented to members of Summerland club

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. (THE CANADIAN PRESS/Paul Chiasson)
30 new COVID-19 cases, five more deaths in Interior Health

This brings the total number of cases to 7,271 since testing began

(Stock photo)
EDITORIAL: The freedom to read

Books have been challenged many times in the past

The dam at Thirsk Lake, west of Summerland, was expanded in 2007. A crack has now been discovered where the old and new portions of the dam meet. (Summerland Review file photo)
Crack at Thirsk Dam to be examined

Reservoir west of Summerland was expanded in 2007

Dr. Bonnie Henry talk about the next steps in B.C.'s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. THE CANADIAN PRESS/Chad Hipolito
456 new COVID-19 cases in B.C., 2 deaths

Since January 2020, 78,278 have tested positive for the novel coronavirus in B.C.

Highway 5 pictured at Zopkios Southbound, Feb. 25 morning. (DriveBC)
Winter storm warning issued for Coquihalla, Highway 3

Up to 30 cm of snow expected by Friday (Feb. 26) morning

Pivot Rx is a new downtown Vernon pharmacy that aims to combine face-to-face care with the latest technological offerings in pharmaceutical care. (Brendan Shykora - Morning Star)
New Vernon pharmacy takes ‘old-school’ approach to cutting-edge care

Pivot Rx has set up shop downtown in a building formerly home to MacKay’s Prescriptions for 40 years

“Support your city” reads a piece of graffiti outside the Ministry of Finance office. (Jane Skrypnek/News Staff)
Slew of anti-bylaw graffiti ‘unacceptable’ says Victoria mayor, police

Downtown businesses, bylaw office and Ministry of Finance vandalized Wednesday morning

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. (THE CANADIAN PRESS/Nathan Denette)
Vaccinating essential workers before seniors in B.C. could save lives: experts

A new study says the switch could also save up to $230 million in provincial health-care costs

The late Michael Gregory, 57, is accused of sexually exploiting six junior high students between 1999 and 2005. (Pixabay)
Former Alberta teacher accused of sexually assaulting students found dead in B.C.

Mounties say Michael Gregory’s death has been deemed ‘non-suspicious’

According to a new poll, a majority of Canadians want to see illicit drugs decriminalized. (THE ASSOCIATED PRESS)
Majority of Canadians think it’s high time to decriminalize illicit drugs: poll

More than two-times the B.C. residents know someone who died from an overdose compared to rest of Canada

Ranchero Deep Creek firefighters respond to a blaze involving two adjacent structures at a property off of Deep Creek Road on Sunday, Feb. 21. The buildings were believed to have been used as part of a cannabis growing operation, and RCMP are investigating. (Sean Coubrough/CSRD photo)
Ranchero Deep Creek firefighters respond to a blaze involving two adjacent structures at a property off of Deep Creek Road on Sunday, Feb. 21. The buildings were believed to have been used as part of a cannabis growing operation, and RCMP are investigating. (Sean Coubrough/CSRD photo)
Shuswap firefighters responding to structure blaze find cannabis grow operation

RCMP investigating, attempting to track down owner of property

Most Read