Debate Over Mortgage Stress Test Intensifies Amidst Sluggish Canadian Housing Market
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Despite recent interest rate cuts, the Canadian real estate market has remained sluggish throughout the summer. This stagnation has led some industry experts to advocate for the elimination of the mortgage stress test. Introduced in 2017 to mitigate risks from rising interest rates, the stress test requires borrowers to qualify at a rate higher than their actual mortgage rate, which has been cited as a significant barrier for first-time homebuyers.
Advocates for removing the stress test argue that it forces new buyers to qualify at effectively higher rates, making homeownership increasingly out of reach. With interest rates declining, there is a call to reconsider the stress test to support first-time buyers and stimulate the market.
However, not everyone agrees with scrapping the stress test. Experts warn that removing it could have negative repercussions, such as fueling bidding wars and driving up home prices. They suggest a nuanced approach, proposing that while the stress test might still be necessary in booming markets, more tailored policies could better support weaker housing markets. This approach aims to balance market stability with accessibility for prospective buyers.
Read the full article on: Global NEWS
