Andrew Scheer, the head of the Conservative Party, promised major changes to Canadian mortgage rules when speaking to the Canadian Home Builders’ Association or CHBA. The Conservative Party leader said that the combination of endless tax hikes and oppressive mortgage regulations were making it impossible for many people to achieve the dream of owning their own home. This only compounded the problem of housing unaffordability in Toronto and Vancouver rather than help cool it down while allowing first time home buyers to enter the market. This also impacted the Fort McMurray housing causing prices to drop along with the oil downturn and the wildfire of 2016. Fort McMurray has seen home prices fall from the combination of mortgage rule changes, oil downturn, and the 2016 wildfire. It is now stable, however with rule changes to loosen the mortgage qualifying this will allow home purchasers to qualify for more of a mortgage changing the supply market for homes above 600k.
Scheer referenced the major unintended consequences from the stress test on uninsured mortgages passed by the Liberal government last year. He said that these regulations would be reviewed, while many would be changed. For example, they are considering bringing back 30-year mortgages. These were last available in 2012. Then OSFI shortened the longest allowed mortgage term to 25 years. This will help first time home buyers and other purchasers qualify for the perfect home. With income levels declined from the downturn in oil and the mortgage rules it pushed most home buyers under the 500k range leaving a high supply in the 600-999k range. Call your local Fort McMurray mortgage broker at Whalen Mortgages today to see your options.
What is certain is that the Conservative party wants to end the stress tests required for those who want to change mortgage lenders when their mortgage is up for renewal. Fort McMurray mortgage holders up for renewal today do not have to undergo a stress test if they renew with their current bank, but they have to undergo the stress test if they want to change banks. The non-bank lenders like First National or Mcap allow the old rules prior to September of 2016 for clients who held a mortgage prior to this date to get grandfathered to the old rules. This means some mortgage holders are unable to change banks and do not know the options they have with the monolines, your Fort McMurray mortgage brokers at Whalen Mortgages are here to help. This gives their current bank an inordinate amount of power and eliminates the need to provide better mortgage terms in order to keep their customers. Other rules prevent first-time homebuyers from qualifying for the mortgage they need to buy a home. This is because the stress test requires someone to prove they could pay the mortgage if interest rates were 200 basis points higher than what the federally regulated mortgage lender was currently charging.
The tighter mortgage rules did not stop all potential homebuyers. Instead, they literally paid for it in higher interest rates charged by the private equity groups that offered them loans.
Scheer stated that housing affordability required more than relaxing mortgage lending rules. They would need to address the supply side, as well. He says he would work with builders to find ways to bring more new housing to market. This includes but is not limited to reducing red tape and streamlining approval processes. In this vein, the Conservative Party leader quoted a Howe Institute report that said oppressive regulations added over 100,000 dollars to the cost of a new single-family home. A larger housing inventory would bring down housing prices.