It's going to be easier to get a mortgage in 2020.. this is my prediction.
In the past, any time the Prime Minister has "asked" one of his ministers to look into a program it always results in some sort of fundamental change to that particular program. Well over the last few weeks PM Justin Trudeau officially asked his Finance Minister Bill Morneau to consider making changes to the Canadian mortgage stress test that has basically resulted in what most have viewed as a significant negative drag on the overall real estate market.
The official statement from the Prime Ministers office is that the minister will “review and consider recommendations from financial agencies related to making the Canadian mortgage stress test more dynamic.”
Ironically it was not the Liberals that brought this specific point up during the recent federal election, but rather the Conservatives who pledged to “fix” the test so to better help first-time homebuyers and those renewing their mortgages. Now because of the recent elections results and the Liberals minority government, the PM and his teams will need support from the other parties to pass any new legislation. However, since all the parties seemed to be in support of this type of review during their election campaigns, it's very unlikely that changes meant to help consumers better afford home ownership will see any governmental push back.
The stress test initially came into effect in 2018 to help protect consumers primarily by limiting the amount of money they could borrow for a new home. The programs initial design was set up so that buyers would have to qualify under the Bank of Canada benchmark rate or the rate offered by the lenders, plus 2 per cent.
This programs real problem from the outset was that the programs design really only addressed demand and not supply. The result was a stabilization of home prices but only because thousands of families were blocked out of the housing market. This reduction in demand also did nothing to improve affordability because the stabilization of pricing was simply matched with a reduction in spending/borrowing. It's just stopped people from buying real estate.
With markets now stabilized however, and the effects of the initial program now well surpassing their original goals, it now makes a ton of sense for the federal government to update the stress test to be better aligned with these current and more favorable real estate market conditions.
So in conclusion, with all this now in play the program should see some changes that make it not only a little more flexible but designed to make it a lot easier on buyers looking for a new or first time mortgage.
Remember, If you are looking for help buying real estate in the GTA, selling or investing in real estate... myself and my real estate team are here to help. We specialize in real estate in Aurora, real estate in Newmarket, real estate in Richmond Hill and real estate in Vaughan, but we do cover the entire GTA. We also help with investing in real estate in pre-construction condominiums or new home subdivisions.