The CEO of CMHC (Canadian Mortgage and Housing Corporation) strongly defends the mortgage stress test.
This comes at a time when there are calls for the stress test to be changed. The CEO feels that the stress test is, “doing what it is suppose to do”.
The CEO said that they need to “look past the plain self-interest” of the Ontario Real Estate Association, the Canadian Home Builders Association and the Mortgage Professionals Association of Canada.
The current stress test rate is 5.34%. Also, in January 2018 all mortgages regardless of the down payment now had to use the stress test.
The goal of the stress test is to protect Canadians from defaulting on their mortgages if rates increase. Also, from borrowing too much debt and to help lower house prices.
Andrew Scheer, Conservative Leader, promised to review the stress test that is keeping many Canadians away from the goal of home ownership.
There are fears that reducing the stress test or offsetting it with 30 year amortizations. For example, will increase the prices of houses in Canada.
CMHC feels that critics of the stress test are ignorant to the fact that the stress test is what is keeping the prices of homes affordable to Canadians.