16 April 2019

According to him, the test ignores the increase of a personal income in Canada, or the fact that a borrower raises its equity with time. In addition to it, B-20 doesn’t consider the lower risk of longer-term mortgages and it’s even partially responsible for the growth of alternative lending popularity.

The housing activity in Canada’s earlier hot markets have slowed since the stress test introduction. The recent report by TREB shows that home sales were almost unchanged last month, pointing to relative stability. Meanwhile, the sales in Vancouver were down by 31.4% annually.

By the way, Tal is not the first one to call for the test review. Earlier, TREB and BCREA also urged the regulators to revisit the stress test and ease the pressure on potential homebuyers, saying the rules make it harder to qualify for a mortgage, and it may have a negative influence on the entire real estate market.

Recently, the federal government made an effort to make Canada’s most expensive markets more affordable, providing $1.25 billion for three years under its First-Time Home Buyer Incentive. Now, Canada Mortgage and Housing Corp. will cover up to 10% for new homes and 5% for existing ones to decrease the cost of mortgage payments.

Nevertheless, Tal believes the plan will not have a significant impact on the market as it will affect only about 3% of borrowers.