Angela Calla of DLC-Angela Calla Mortgage Team says that the stress test should never have been introduced in the first place, adding it was implemented without proper industry consultation
Andrew Scheer proposed extending amortizations for first-time homebuyers, loosening the stress test and eliminating it for renewals, but that might be unwise, say experts.
The Canada Mortgage and Housing Agency’s CEO Evan Siddall previously noted that B-20 brought housing prices down 3.4% and a separate TD report from earlier this year also surmised housing prices would increase 6% by the end of 2020 if it weren’t for the stress test.
Thomas Davidoff, a University of British Columbia Sauder School of Business professor, says Scheer’s proposals aren’t fit for all markets. Moreover, Davidoff added that even Prime Minister Justin Trudeau’s promise that, if re-elected, he would expand the Frist-Time Home Buyer Incentive isn’t without its problems for taxpayers, but it’s inherently less risky than what Scheer is proposing.
Tsur Somerville, another professor from the UBC Sauder School of Business, and Davidoff say increasing housing supply would improve affordability.
“There’s no magic bullet on housing,” said Somerville. “If we’re concerned about Canadians’ level of debt, why are we helping them take on more debt?”
However, Angela Calla of DLC-Angela Calla Mortgage Team says that the stress test should never have been introduced in the first place, adding it was implemented without proper industry consultation.
“As mortgage professionals, we’re on the frontlines of seeing how people spend money day-to-day,” she said. “The fact they had zero care or regard for our industry, and for the last two years have operated with a closed door, has been frustrating.”
Further to that point, Calla noted that the Conservative Party of Canada consulted with the mortgage industry before Scheer announced his proposals regarding amortizations and amending the stress test.
“The Conservative Party reached out to our industry to learn about financial prudence while still giving Canadians the power of choice,” continued Calla. “It’s different when government listens to you and asks for data that would help people. I think this approach would be much more beneficial because Canadians are the best decision makers for where their money goes to help their families.”
With files from The Canadian Press
