Major markets are seeing stronger housing market activity recently
The Toronto Regional Real Estate Board has called on the federal government to re-evaluate the stress test in light of a resurgence in housing market activity, seemingly undeterred by price spikes.
John DiMichele, CEO of the TRREB, said that the Office of the Superintendent of Financial Institutions should deliberate on whether the current stress test remains applicable, considering the prevailing environment of economic and fiscal volatility.
“Is it reasonable to test home buyers at two percentage points above the current elevated rates, or should a more flexible test be applied that follows the interest rate cycle?” DiMichele said.
“In addition, OSFI should consider removing the stress test for existing mortgage holders who want to shop for the best possible rate at renewal rather than forcing them to stay with their existing lender to avoid the stress test. This is especially the case when no additional funds are being requested.”
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Kevin Crigger, president of the TRREB, argued that the Liberal government is perfectly placed to address the potential crisis.
“While higher borrowing costs have impacted home purchase decisions, existing homeowners nearing mortgage renewal are also facing higher costs,” Crigger said. “There is room for the federal government to provide for greater housing affordability for existing homeowners by removing the stress test when existing mortgages are switched to a new lender, allowing for greater competition in the mortgage market.
“Further, allowing for longer amortization periods on mortgage renewals would assist current homeowners in an inflationary environment where everyday costs have risen dramatically.”
