My Mortgage Blog

The Mortgage Stress Test has been in the news again this week. This time, it's because the Federal Conservative Leader, Andrew Scheer is making promises over what his party will do if they are elected in October.

Now I am non-partisan, and try to keep politics, religion and alike out of my posts, but this one hits a bit closer to home. I am in the position, as a Mortgage Broker, to see the impact of these continued restrictions on mortgage lending on home buyers each and every day. We, as a professional organization, have not stayed quiet and have been lobbying the Government for change.

What is Mortgage Professionals Canada doing?

Over the last few years, Mortgage Professionals Canada (MPC), our national professional organization, has held hundreds of meetings nationwide with policymakers to discuss housing affordability. They have been asking for a number of changes to the mortgage macro-prudential rules, primarily focusing on:

  • a reduction in the mortgage rule stress tests
  • the re-introduction of a mortgage insurance eligible 30-year amortization for first-time buyers
  • a stress test exemption for borrowers who have paid as agreed through their first term and who wish to renew with another lender

These recommendations are made in the interest of supporting access to homeownership for younger, aspiring middle-class Canadians, whose long term economic well-being has been disproportionately disadvantaged by the recent policy changes we are all too familiar with.

MPC had been looking to the March, 2019 federal budget to provide assistance to existing and aspiring homeowners across Canada. While well-intentioned, we believe the new First-Time Home Buyer Incentive (FTHBI), as originally proposed, will not provide the necessary relief our long-standing recommendations would provide, although we are encouraged to see the promised increased income and multiple maximums recently announced for the GTA/GVA and Victoria.

Important Election Campaign Announcement

On Monday, Conservative Party of Canada Leader Andrew Scheer promised to do the following, if his party forms the next government:

  1. Fix the mortgage stress test to ensure that first-time homebuyers aren’t unnecessarily prevented from accessing mortgages and work with OSFI to remove the stress test from mortgage renewals to give homeowners more options
  2. Increase amortization periods on insured mortgages to 30 years for first-time homebuyers to lower monthly payments
  3. Launch an inquiry into money laundering in the real estate sector and work with Our industry partners to root out corrupt practices that inflate housing prices
  4. Make surplus federal real estate available for development to increase the supply of housing

Involvement from Canadians

Our issues don’t end with this week's announcement and we are still asking you to discuss the issues with your local candidates, in person, on social media, or however you feel comfortable. Knowing that housing affordability is undoubtedly an important federal election issue, we suggest that you ask the following questions regarding housing policy in Canada:

  1. Does your party support reducing the mortgage stress test qualifying rate, currently at 5.19% despite five-year closed terms being available for under 3%? If yes, what do you consider an acceptable level; if not, please provide details or describe your party’s proposed alternative market approach
  2. Does your party support a stress-test exemption for borrowers who have paid as agreed through their most recent mortgage term and who wish to renew with a different lender? If not, please provide details or describe your party’s proposed alternative market approach
  3. In your first year in office, will your party reintroduce mortgage insurance-eligible 30-year amortizations for first-time buyers? If not, does your platform contain an alternative provision to provide additional financing options for aspiring middle-class Canadians, or does your party feel the housing market is now well structured and needs no adjustment? Please provide details
  4. How will you support or incentivize new home starts to prevent steep price increases due to lack of supply?
  5. What other measures in your party’s platform address and acknowledge the concerns of the mortgage brokering community and their clients?

I ask you to do your part to find out how your candidates are going to ensure home ownership is attainable and affordable for Canadians.