Canada Mortgage and Housing Corporation (CMHC) has defended mortgage stress test rules and warned federal policymakers to hold the line amid calls from industry associations to ease the rules.
“My job is to advise you against this reckless myopia and protect our economy from potentially tragic consequences,” Evan Siddall, CMHC’s president and CEO, said in a letter to the Standing Committee on Finance dated Thursday.
Siddall urged the committee to “look past the plain self-interest” of the parties lobbying for easing the rules. The Mortgage Professionals Association of Canada (MPAC), the Canadian Home Builders Association (CHBA), and the Ontario Real Estate Association (OREA) have all called for such change, according to a report by The Canadian Press.
“I'm quite surprised to see that our community was somewhat vilified by the letter,” said Paul Taylor, MPAC’s president and CEO, saying that the group was trying to provide observations about why the stress test might need some adjustments.
Meanwhile, Kevin Lee, CHBA’s CEO, said that the group has similar aspirations to CMHC, namely: affordable housing and avoiding excessive consumer debt.
“But we have a different view on what the impact of all the mortgage rules has been, and where we're at right now and what the best route forward is,” Lee said.
Policies like the “rigid, one-sized-fits-all stress test and restrictions on legitimate mortgage choices” should be regularly reviewed, said Tim Hudak, OREA’s CEO.
“Ontario realtors are fighting for Canadians who are having their dream of becoming homeowners dashed by bureaucratic overreach in the mortgage market and outdated red tape and expensive regulations restricting housing supply and choice,” Hudak said.
Siddall argues that “the stress test is doing what it is supposed to do.” He said that changes to the stress test requirements since 2010 have helped keep home prices 3.4% lower nationally than where they otherwise would have been.
“Critics of the stress test ignore the fact that high house prices are the overwhelming reason why homeownership is out of reach,” Siddall said.