Real Estate

Stress Test Being Rolled Back?

  • Last Updated:
  • May 19th, 2019 10:59 am
Tags:
25 replies
Deal Fanatic
User avatar
Sep 8, 2007
6545 posts
5421 upvotes
Way Out of GTA
Bears don't know what to do. Because on one hand if they wanted to get a place, they could get a mortgage easier but on the other hand it's likely to allow prices to keep creeping higher (hence not allowing them to buy 50% lower during a crash from here).

Conundrum!
Member
Jul 25, 2008
316 posts
192 upvotes
ottawa
This is about as smart as Trump's fiscal explosion.
Member
Jun 1, 2017
358 posts
303 upvotes
Stupid OSFI did something to show their existence. Before stress test, who knew what OSFI was?
Member
Aug 16, 2011
292 posts
158 upvotes
OTTAWA
Until he's elected as the PM and actually puts a bill on the floor... these are all words for his election platform
Deal Addict
Dec 27, 2006
1890 posts
866 upvotes
https://www.bnnbloomberg.ca/i-would-fro ... gage-rules

'I would frown upon it': Poloz on calls to loosen mortgage rules
The governor of the Bank of Canada is rejecting calls to unwind some of the strict new mortgage policies that have contributed to a cooldown in the country’s previously red-hot housing markets.

"I would frown upon it," Stephen Poloz told BNN Bloomberg when asked about pressure on policymakers to loosen certain rules.

Real estate boards in the country's two largest housing markets have been speaking up in recent months about fallout from the B-20 mortgage guideline that was implemented by the Office of the Superintendent of Financial Institutions at the start of 2018. The rule imposed new stress tests for uninsured mortgages, where the borrower makes a down payment of at least 20 per cent on the purchase of a home.

But Poloz isn't buying into the outcry, noting that jawboning alone wasn't enough to change homebuyers’ behaviour.

"I think for a couple of years we were advocating that individuals do their own self-stress tests – which just makes common sense, you know, not to assume that rates would be that low forever," he said in an interview taped Thursday in Ottawa after the central bank published its Financial System Review.

"There wasn't much reaction to that kind of advertising, if you want to call it that. So, in the end, I think these rules are having an important effect and one that people are adapting to."

READ MORE ON CANADIAN HOUSING

Toronto and Montreal boost Canadian home sales in April
Poloz underestimates Canada's housing slump: Capital Economics
B-20 mortgage stress test needs to be revisited: CIBC’s Tal
And while the B-20 guideline has been cited as a factor in recent data showing sharp year-over-year declines in home sales across Metro Vancouver, Poloz said the impact has been less profound outside of that city and Toronto, where prices ran up most sharply before policymakers intervened.

"If you look at markets that didn't have any froth, people are adapting quite normally," he said. "Any place from Winnipeg to Ottawa, Montreal, Halifax, Moncton are all behaving exactly according to our models. So we think it's doing its job."

While the central bank's Financial System Review acknowledged progress on vulnerabilities surrounding consumer debt and housing market imbalances, it also put the spotlight on at-risk Canadians. Indeed, the Bank of Canada noted a significant proportion (42 per cent) of households would struggle to refinance their mortgage if home prices fall 20 per cent.

While not common, Poloz said that type of market correction is "conceivable," particularly given the run-up in prices in recent years. But he’s confident Canadians understand the risk.

"I think that most people are mentally prepared," he told BNN Bloomberg. "And, in Canada, historically when these things have happened, people understand they've gone maybe underwater, but you know that within a few years they're no longer underwater and life goes on. People pay their mortgage and we're okay."

HAVE YOUR SAY

poll image
Do you think the B-20 mortgage stress test rules need to be softened?
Member
Jul 25, 2008
316 posts
192 upvotes
ottawa
neilsmith43 wrote:
May 17th, 2019 8:52 am
Stupid OSFI did something to show their existence. Before stress test, who knew what OSFI was?
hopefully anyone who invests in bank stocks.

ideally also anyone who takes debt from OSFI-regulated institutions, but admittedly our education system isn't the best.
[OP]
Deal Fanatic
Feb 22, 2011
5774 posts
5451 upvotes
Toronto
Jeremyl007 wrote:
May 17th, 2019 9:34 am
Until he's elected as the PM and actually puts a bill on the floor... these are all words for his election platform
If Ford has taught us one thing it's that PC deliver on promises in rapid fashion. Especially when it comes to cuts or rollbacks on policy. I also think it's inevitable he wins, LPC has been trending down for 4 years and this admin is at all time lows with all the pollsters and still going down.
Member
Jun 1, 2017
358 posts
303 upvotes
Jeremyl007 wrote:
May 17th, 2019 9:34 am
Until he's elected as the PM and actually puts a bill on the floor... these are all words for his election platform
Anyway we don't want left-wing party to have communism. We don't want to be Greece or Venezuela.
Deal Addict
Dec 23, 2010
1334 posts
700 upvotes
Moon
Scheer has just won the vote of every home owner. People should be absolutely free to choose how much they want to spend on the house. It should be between me and the banks to decide what I can afford. The government should have NOTHING to do with it.
Member
Jun 1, 2017
358 posts
303 upvotes
Applesmack wrote:
May 17th, 2019 10:56 am
Scheer has just won the vote of every home owner. People should be absolutely free to choose how much they want to spend on the house. It should be between me and the banks to decide what I can afford. The government should have NOTHING to do with it.
Yes. Government should not but idiot Wynne did. OSFI did.
Newbie
Feb 7, 2018
51 posts
49 upvotes
Applesmack wrote:
May 17th, 2019 10:56 am
Scheer has just won the vote of every home owner. People should be absolutely free to choose how much they want to spend on the house. It should be between me and the banks to decide what I can afford. The government should have NOTHING to do with it.
Agree with you on purchases with >= 20% down as they aren’t CMHC (taxpayer) backed, Govt should not penalize savers and put them in the same bucket as people who roll the dice with a small DP and hope prices rise. I’m all in favour of stress testing < 20% down, as the banks will just offload all risk onto taxpayers like they did in the states.

The LPC really needs to fix itself - this whole NDP lite look is starting to alienate traditional Liberal voters (fiscally conscious, socially liberal). This whole OSFI business is a total scam, we all see right through it, and many homeowners and potential homeowners will vote the other way because of it.
Deal Fanatic
Feb 29, 2008
7457 posts
2767 upvotes
wiab89 wrote:
May 17th, 2019 12:22 pm
Agree with you on purchases with >= 20% down as they aren’t CMHC (taxpayer) backed, Govt should not penalize savers and put them in the same bucket as people who roll the dice with a small DP and hope prices rise. I’m all in favour of stress testing < 20% down, as the banks will just offload all risk onto taxpayers like they did in the states.

The LPC really needs to fix itself - this whole NDP lite look is starting to alienate traditional Liberal voters (fiscally conscious, socially liberal). This whole OSFI business is a total scam, we all see right through it, and many homeowners and potential homeowners will vote the other way because of it.
Yup. I was Lib up until the last couple years. Completely done. How on earth am I getting stress tested when I have 35% down? It’s just dumb. Stress test those who don’t have enough of a down payment.
Newbie
May 6, 2019
23 posts
5 upvotes
Rolled back? Will they really do that? Politics :/

In agreement that savers should not be penalized.

Makes zero sense why someone who has a large down payment, stable job, can qualify but is turned away because we all gotta pretend interest rates are 2% higher.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)