If you’ve been having a hard time getting approved for a mortgage since the stress test was introduced in 2018, you aren’t alone. In fact, about 10% of buyers who would have been approved for a mortgage before the stress test find that they can no longer get into the home they were hoping for.
This has caused problems in the market. Specifically, fewer buyers means fewer sales, which means that homeowners who were hoping to move up and on are stuck waiting. In fact, even some existing homeowners are finding it difficult to get approved for more than they already have. Sometimes they’re being approved for even less!
So it’ll be music to your ears (and ours) to hear that the Prime Minister has ordered the new Finance Minister, Bill Morneau, to make a review of the mortgage stress test. The Mandate Letter was long and full of “to dos” for the new minister, but the PM’s specific words were, “you will… [r]eview and consider recommendations from financial agencies related to making the borrower stress test more dynamic.”
Mortgage Professionals Canada (MPC) has taken this as a win, “proof positive of our efforts,” they stated in a letter to their members on December 13. MPC Accounts the victory to their diligent efforts. “Our board, staff, and a roster of members who joined us in Ottawa for our meetings have spoken, and been heard.” Janet McFarland of the Globe and Mail stated that MPC “lead the charge for relaxing the government’s mandated mortgage qualifying stress test.” (G&M, page B1, February 25, 2019). Senior members of MPC met with policymakers and reported that they “were receptive to reviewing the stress test mechanism based on recommendations and testimony MPC presented through 2019.” The Prime Minister’s Mandate Letter came out soon after these meetings.
There is some speculation about what a ‘more dynamic’ stress test will look like, but MPC is confident it can only be good. “To round out 2019 on this news is a positive for our 11,500 members, Canada’s mortgage brokering community, and for existing and aspiring Canadian homeowners.”
Additional meetings between MPC and Members of Parliament will take place in February. If you’re looking to mount the hurtle of the stress test, things are looking up. Cross your fingers! And your toes!