The chorus demanding a B-20 repeal is growing louder by the week
The chorus demanding a B-20 repeal is growing louder by the week.
A week after the Toronto Real Estate Board called on Ottawa for a second time in a month to reconsider the mortgage stress test, the British Columbia Real Estate Board has done the same. According to BCREA, the stress test has reduced purchasing power by 20% and exacerbated, rather than aided, housing affordability woes.
Last month, there were only 4,533 residential home sales through the Multiple Listings Service in the province, a 27% decline over February 2017, while the average price fell 9.3% to $678,625. Conversely, listings rose 36.5% to 30,891 over the same 12-month period.
“As a consequence, and despite a strong B.C. labour market, sales remained slow in February,” Brendon Ogmundson, BCREA’s deputy chief economist, said in a statement.
“Falling mortgage rates should provide some relief for homebuyers, providing a small boost to affordability heading into the spring.”
The mortgage stress test was introduced to curb rapid price escalation in Toronto and Vancouver, however, the average price of homes in the Lower Mainland nearly doubled while remaining virtually flat in the rest of the province.
“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,” BCREA’s CEO Darlene Hyde said in a statement. “These rules must be changed now before B.C. families are left further behind.”
The CEO of TREB first called on the federal government to review the stress test in February. While crediting the government for taking action on key housing files, TREB nevertheless admonished one of its agencies for implementing a stress test that, combined with rising interest rates, is disastrous for both buyers and the economy.
“One area that needs to be revisited is the imposition of the OSFI-mandated two percentage point mortgage stress test,” John DiMichele said in a statement. “While we saw buyers return to the market in the second half of 2018, we have to have an honest discussion on whether or not today’s homebuyers are being stress tested against rates that are realistic. Home sales in the GTA, and Canada more broadly, play a huge role in economic growth, job creation and government revenues each year. Looking through this lens, policymakers need to be aware of unintended consequences the stress test could have on the housing market and broader economy.”
