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

Three people taken to hospital after a fire at Rutland home

The fire which was located on the second floor of the townhouse complex is now out

Multiple crashes, including a bus, plague Highway 97

Thursday’s evening commute in Kelowna slowed by collisions

Health minister announces new urgent care centre in Kelowna

Adrian Dix made the annoucment Thursday at the Capri Centre

Provincial Mobile Medical Unit makes an appearance in Kelowna

The high tech hospital on wheels provides medical care for rural communities and during emergencies

Special Olympics fundraiser comes to downtown Kelowna

motionball Marathon of Sport kicks-off in City Park Saturday

VIDEO: Trudeau asks Canada to look to current, not past, actions on race

Liberal leader says he never spoke about the racist photo because he was embarrassed

Fire at Kelowna home sends three to hospital

The fire which was located on the second floor of the townhouse complex is now out

Reports of chaos in Penticton, involving police cruiser and possible shots fired

Residents also reported hearing shots fired at the same time as the crash

Horvat paces Canucks to 6-1 pre-season win over Oilers

Vancouver improves to 3-1 in NHL exhibition action

Legislature gifts, clothing, travel need better control, B.C. auditor says

Audit follows suspensions of managers by Speaker Darryl Plecas

‘Really disturbing:’ Trudeau’s racist photos worry B.C. First Nation chief

Wet’suwet’en Chief concerned the photos will sow fear in Indigenous communities

‘Unacceptable’: What politicians have to say about Trudeau in blackface

Calgary Mayor Naheed Nenshi: ‘When I saw that picture last night, certainly it was a sucker-punch’

‘He’s trying to kill me’: Victoria police commandeer boats to reach screaming woman

No charges laid and civilians to be awarded honours after incident on Gorge Waterway

South Okanagan driver held at gunpoint, car-jacked near Penticton

Penticton RCMP are asking for the public to keep an eye out for the suspect, stolen vehicle

Most Read