Conservative Party leader Scheer has promised major changes to Canadian mortgage rules. He shared his vision at a meeting with the Canadian Home Builders’ Association (CHBA).
Scheer said that housing affordability was a critical issue across Canada, though it is worse in Toronto and Vancouver. He cited both tax hikes and mortgage regulations as making it harder for people to buy homes.
One regulation Scheer wanted to change was the stress test for uninsured mortgages. He said that it would be reviewed and likely changed. He said that they would certainly eliminate the stress test applied to mortgage switches. For those who do not know, the stress test currently applies to those who want to switch lenders when their mortgage is up for renewal at the big banks. Yet they do not face that same stress test when they stay with their existing lender. This forces many Red Deer mortgage customers to stay with their current lender though there are lenders offering lower interest rates or better mortgage terms. We do have lots of amazing non-bank lenders who will grandfather you in with the old rules if your mortgage was approved prior to September of 2016. Call your trusted Red Deer Mortgage Brokers at Red Deer Whalen Mortgages today to discuss your mortgage.
Scheer said that his party was considering bringing back the 30-year amortization term for insured mortgages. The last time these loans were available was in 2012. The OSFI shortened the maximum loan term to 25 years. There are other government policies that choke off access to mortgages for potential first time home buyers.
These policies did not stop everyone on the borderline from buying homes. Instead, it forced many to turn to private equity firms that charged much higher interest. All because they didn’t qualify under the stress test that mandated they prove they could pay the loan if the interest rate was 200 basis points higher than the interest rate offered by the federally regulated mortgage insurer. Many ended up paying excessive fees with a private equity firm to secure a mortgage. These same suggestions were made by Phil Moore, the head of the Real Estate Board of Greater Vancouver.
Scheer also said that his party wanted to address the supply side of the equation. The Conservative Party wants to make it easier for people to build homes. This includes reviewing and streamlining the processes for getting approval to build homes and reducing the bureaucratic costs builders face. Scheer cited a report that said these excessive regulations added more than a hundred thousand dollars to the cost of every new home. He promised to work with builders to come up with ways to bring more housing units to the market in order to bring down costs.