30 April 2019

As you know, under the new rules, federally regulated lenders must apply a 2% stress test on new mortgages in order to maintain high lending quality amid sharply growing prices. However, TD says the rules are affecting certain segments disproportionately, particularly first-time homebuyers, who usually account for 40%-50% of the market, and the cities with youthful demographics, e.g. Toronto and Vancouver.

“Today it’s a general rule for everyone, but borrowers show different abilities to service their mortgage, and different risk levels,” – Bushmeneva said. In her opinion, it’s necessary to bring more flexibility to the B-20 rules, as they don’t consider borrowers’ credit-worthiness or a life stage.

Meanwhile, eliminating the rules at once may lead to home prices increase by extra 6% in addition to TD’s forecast of a 4% hike by the end of 2020. It represents an increase by about $32,000 on average.

The stricter rules pushed some buyers to the rental market, causing a 3% decline in vacancy rates for purpose-built rental units in Toronto and Vancouver. It’s a strong challenge, as these markets are already facing only 1% vacancy rate.

Toronto-Dominion joins CIBC, numerous realtors and builder groups demanding a review of B-20 rules.