Canada stress test should be lowered: brokerage president

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Houses for sale in Ottawa

That means that a growing number of Canadians who are unable to buy a new house because of the higher qualifying rate choose to stay in their homes and renovate their current properties, said Kilakos – a trend that’s only exacerbating the growing housing supply crisis in the country.

“The guy that’s making x amount of dollars, when their house hits $500,000, they would say, ‘I think it’s time we sell – we can upgrade our home,’” he said. “They can’t upgrade now because of the stress test. So, what do they do? They stay put. And that’s causing a lack of inventory in the market.”

Still, the higher stress test looks like it could be here to stay, particularly with the issue having barely registered as a discussion point in last September’s federal election campaign.

The Liberal Party’s manifesto pledged to reduce Canadians’ monthly mortgage costs but made no mention of the qualifying rate, while Erin O’Toole’s Conservatives said they would fix the stress test to stop “discriminating” against contractors, non-permanent employees and small business owners – but finished a distant second in the September election.

Last month, OSFI indicated that it would keep the stress test rate at its current level, signalling no plans to either further increase or decrease its level.

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