The Office of the Superintendent of Financial Institutions (OSFI) announced it intends to raise the current test level to 5.25%, or two percentage points above the market rate, whichever is higher, and is currently seeking submissions ahead of possibly implementing the new rules on June 01.
Aceto said that the stress test, first implemented in 2018, was a good idea to ensure stability in the housing market, but that increasing the threshold for homebuyers was the wrong step.
“For me, making that buffer even bigger doesn’t seem like the most logical tool to help borrowers and lenders, and to cool down the housing market,” he told Mortgage Broker News.
The current stress test level is 4.79%, based on the current average five-year posted rate at Canada’s biggest lenders, as per the B-20 Guidelines. The Bank of Canada slashed its five-year conventional mortgage rate from 4.94% last August, but that trajectory has been reversed due to continued sky-high demand in the housing market.
Instead of hiking the stress test, Aceto said that federal, provincial and municipal authorities could pursue other measures, including addressing the difficulties that new homebuyers have in entering the market. # SANDI HALPERN # HOUSING MARKET # STRESS TEST # COOLING REAL ESTATE MARKET
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