The Canada Mortgage and Housing Corporation’s president and CEO is imploring the government to stay the course with B-20 amid cacophonous opposition
The Canada Mortgage and Housing Corporation’s president and CEO is imploring the government to stay the course with B-20 amid cacophonous opposition.
“My job is to advise you against this reckless myopia and protect our economy from potentially tragic consequences,” Evan Siddall wrote in a letter to the Standing Committee on Finance.
He, furthermore, stated that the calls for B-20 amendments come from self-interested parties, including the Canadian Home Builders Association, Mortgage Professionals Canada, and the Ontario Real Estate Association.
But Frances Hinojosa, managing partner of Tribe Financial, says that the time has come for CMHC to support changes to the rules surrounding mortgage qualification because, not only has the housing market cooled considerably, they’re overly proscriptive.
“I don’t think we can do an abrupt 360 and go back to the way things were before the latest round of B-20, but I think the numbers don’t lie,” she told MortgageBrokerNews.ca. “There’s been strong cooling across Canada and there should be prudent changes to the rules.”
Moreover, Hinojosa says that the mortgage industry is nothing if not used to change and the time is nigh for yet more.
“Change has always been a constant in the mortgage industry. What I see on the street and hear in conversations I have with people across Canada is that there are some amendments that need to be taken into consideration before we do long-lasting damage to the housing market. Based on the numbers, the warning signs are there, and to recommend staying the course is short-sighted of CMHC.”
One change MPAC noted would help first-time homebuyers get a foothold in the housing market is reducing the stress test to 0.75% from 2%. Another one that’s been floated publicly is extending amortizations on insured mortgages to 30 years.
“Seventy-five basis points is feasible,” agreed Hinojosa. “I don’t expect to see policymakers turn around and return things to the way they were, but they should at least be cognizant of the landscape and how consumers qualify with mortgages. When they set up those rules they were assuming that interest rates would be on an upward trajectory, but that isn’t the case anymore. Qualifying clients 2% above contract rate is pretty aggressive, so let’s amend the stress test to something rational that’s based on the current interest rate predictions.”
With files from The Canadian Press
