The mortgage stress test continues to affect Saskatchewan’s housing market despite increases in market activity, the Association of Saskatchewan Realtors (ASR) said.
Both Regina and Saskatoon saw double-digit sales increases in April compared to the previous year, ASR CEO Bill Madder said, but he cautioned that there are still signs of the damaging effects of the stress test.
The Canadian Real Estate Association estimates that a homebuyer in Regina with a 20% down payment would have to come up with an additional $43,000 to qualify for a $274,000 home due to the stress test, or lower their target to $231,000. In Saskatoon, a homebuyer with a 20% down payment would have to come up with an extra $48,000 to qualify for a $306,900 home, or lower their target to $259,000.
The Canadian Home Builder’s Association estimates that more than 150,000 buyers have been taken out of the market due to the stress test, with more than half being first-time buyers. Madder said that those buyers need to be back to the market.
ASR is calling for three revisions to the stress test, according to a Global News report. The first is for a regional approach in applying the stress test to take into account economic variances. The second is adjusting the 200-basis-point spread based on regional economic factors, and the third is reintroducing 30-year mortgages.
“We feel that a return to a healthy, balanced market could be achieved by making adjustments to the regulations, which would allow some of the buyers who have unnecessarily been taken out of the market to get back in,” Madder said.