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

Destructive blaze in West Kelowna fatal for cat

The fire at a West Kelowna condo claimed the life of one tenant’s cat

For New York artist from the darkness comes light

Light has a spiritual life of its own for New York artist who opens his show March 30 in Penticton

Penticton SAR team helicopters injured climber to safety

A 30-year-old woman suffered a suspected lower-limb fracture in Skaha Bluffs Provincial Park

‘Hauntingly gritty’ duo coming to iconic Okanagan music venue

The LYNNeS multi-award-winning Canadian folk artists are going to be in Penticton March 27

Rain on the way for the Okanagan-Shuswap

Vernon’s dust warning is ongoing

Okanagan experts share bike security tips

Geoff Prowse from the Bike Barn and Josh Shulman from Freedom the Bike Shop share their tips.

Destructive blaze in West Kelowna fatal for cat

The fire at a West Kelowna condo claimed the life of one tenant’s cat

Sock Hop aims to send dancers back to another time

Writers’ Festival fundraiser in Salmon Arm springs into step for another year

Man pinned under metal tank in West Kelowna

Emergency personnel are on the scene

Fundraising campaign launched for man caught in SilverStar avalanche

In only two days, the GoFundMe surpassed its $15,000 goal

Terror at sea: Helicopter rescues frightened cruise passengers in Norway

The Viking Sky cruise ship was carrying 1,300 passengers and crew when it experienced engine trouble

DOJ: Trump campaign did not co-ordinate with Russia in 2016

Attorney General William Barr said special counsel “does not exonerate” Trump of obstructing justice

Trudeau in Vancouver to support Tamara Taggart at Liberal nomination event

The former broadcaster is seeking the nomination for the Vancouver Kingsway riding

Mudslide sends debris into Highway

Highway 33 near Joe Rich had mud spilled on the highway from the slide

Most Read