B.C. real estate board urges feds to revisit mortgage stress test

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.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

People skate on a lake in a city park in Montreal, Sunday, January 10, 2021. THE CANADIAN PRESS/Graham Hughes
The end of hugs: How COVID-19 has changed daily life a year after Canada’s 1st case

Today marks the one year anniversary of COVID-19 landing in Canada

Wet’suwet’en supporters and Coastal GasLink opponents continue to protest outside the B.C. Legislature in Victoria, B.C., on Thursday, February 27, 2020. THE CANADIAN PRESS/Chad Hipolito
‘We’re still in it’: Wet’suwet’en push forward on rights recognition

The 670-km Coastal GasLink pipeline was approved by B.C. and 20 elected First Nations councils on its path

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Employers might be able to require COVID-19 vaccination from employees: B.C. lawyer

‘An employer must make the case’ using expert science, explains lawyer David Mardiros

The COVID-19 outbreak at the two Coastal GasLink workforce lodges has officially been declared over. (Lakes District News file photo)
COVID-19 outbreak at Coastal GasLink worksites declared over

In total, 56 cases were associated with the outbreak in the Burns Lake and Nechako LHAs

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane gets towed from Chilliwack to Greater Victoria

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
Second doses delayed as B.C. vaccine delivery delayed again

New COVID-19 cases slowing in Fraser Health region

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

A Kelowna couple welcomed their Nooner baby in December. (Flytographer)
Kelowna couple welcomes baby girl from Hotel Zed Nooner campaign

Nicole and Alex will now have 18 years of free stays at the hotel

Kyrell Sopotyk was drafted by the Kamloops Blazers in 2016 and played two seasons with the Western Hockey League club. (Photograph By ALLEN DOUGLAS/KTW)
Kamloops Blazer paralyzed in snowboarding accident sparks fundraiser for family

As of Jan. 24, more than $68,000 had been raised to help Kamloops Blazers’ forward Kyrell Sopotyk

(Pixhere photo)
B.C. dentists argue for COVID-19 vaccine priority after ‘disappointing’ exclusion from plan

Vaccines are essential for dentists as patients cannot wear masks during treatment, argues BCDA

The fine for changing lanes or merging over a solid line costs drivers $109 and two penalty points in B.C. (Screenshot via Google Street View)
B.C. drivers caught crossing, merging over solid white lines face hefty fine

Ticket for $109, two penalty points issued under Motor Vehicle Act for crossing solid lines

Most Read