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

Former TOSH director: ‘I will miss that challenge’

Corinne James looks back fondly on memories made at art centre

Parksville resort fire caused by flammable gas used to extract oil from cannabis

Investigators detail reasons for explosion and blaze that destroyed building

RDN adopts new bylaw to prevent backflow

Board wants to avoid legal liability

Former Parksville Generals player lands head coaching gig in Norway

New position is a dream come true for Henry Acres

Suspect arrested following gunpoint robbery in Qualicum Beach

Stop and Shop Grocery was robbed June 5; man now in custody

VIDEO: Sexting teens at risk of depression and substance abuse, Canadian study says

Use of alcohol, cigarettes and marijuana were also found to be associated with sexting

VIDEO: Toronto Raptors announcer credited with calming crowds after shooting

Matt Devlin, the Raptors’ play-by-play announcer since 2008, was praised for preventing panic from spreading

Mini-horse visits residents at Lower Mainland care home

Gunner turned a visit with grandpa into a major event for everyone at the residence

Women sue former Vancouver cop over alleged sexual abuse during pimp case

Two women claim James Fisher caused psychological trauma during the Reza Moazami investigation

First ever Indigenous person to join the RCMP to be honoured in B.C.

Hawk Kelly said becoming a Mountie was his dream job as a kid

Suicide confirmed in case of B.C. father who’d been missing for months

2018 disappearance sparked massive search for Ben Kilmer

Deadline for cabinet to decide future of Trans Mountain expansion is today

International Trade Minister Jim Carr described the decision as ‘very significant’

Mom describes finding son ‘gone’ on first day of B.C. inquest into overdose death

Resulting recommendations could change handling of youth records amidst the overdose crisis

B.C. church’s Pride flag defaced for second time in 12 days

Delta’s Ladner United Church says it will continue to fly the flag for Pride month

Most Read