The mortgage stress test is now more than a year old and its impact continues to be reported by industry stakeholders.
The Canadian Home Builders Association recently asked its home builder and developer members for their views and most said homebuyers are facing increasing difficulties in securing a mortgage.
90% of respondents reported that their customers experienced more difficulty qualifying for a mortgage in 2018 than in the previous year and 84% said there was an increase in the number of completed home purchase agreements that subsequently failed due to a financing problem.
They said this had led to a 33% drop in first-time buyers.
“We know why the stress test was put in place but given that economic and housing market conditions have changed and considering the impact that all of the mortgage rule changes have had on first-time buyers, we do think it’s time for some policy adjustments,” said CHBA CEO Kevin Lee.
CHBA along with other industry stakeholders is urging the federal government to rethink its policy and has made several recommendations including restoring 30-year mortgages for first-time home buyers and making some adjustments to the current stress test now that the market has changed.
“CHBA has put forward two constructive recommendations to the government that could help buyers while posing limited additional financial risk. Equifax data shows that young people are in fact the lowest risk cohort in terms of mortgage arrears, yet they are the most affected by the mortgage rule changes,” Lee added.