Conservative Leader Promise to Review Mortgage ‘stress test’ and allow for Longer Mortgages
Amidst the 2019 federal election, Andrew Scheer of the Conservative Party is promising to review the existing ‘stress test’ that has been the hardest hurdle for Canadians to get a mortgage to purchase a home. This is especially true for first time home buyer because they do not have a large down payment and their salary limit how much money they can borrow.
The ‘stress test’ is a financial assessment that Canadian must pass to take out a mortgage. Introduced by the Office of the Superintendent of Financial Institutions, the stress test is one of many factors that caused home prices to fall in Vancouver. Last year, prospective homeowner cannot afford a home and now, they cannot get a mortgage to purchase a home when it is more affordable. CIBC reports an estimated $6.5-7.5 billion mortgage value drop due to the stress test. Under the ‘stress test’ borrowers are tested at two percentage points above the actual mortgage rate or an average five-year posted rate. The ‘stress test’ was originally for borrowers with less than 20 percent down, it is now for everyone.
If the Conservative government is elected, it will allow people to take out 30-year mortgage. A 5-year increase from the existing 25-year limit for first-time home buyers. This will reduce their burden during their early career days. As we’re approaching election day, we’re expecting more parties to provide their input about us real estate issues.