Mortgage Stress Test Qualification Process Brings Outrage

With the recent news of changes to how potential new home buyers will be assessed for a mortgage sinking in across the country, it looks like most people are rocked by the news due to how difficult it will be for many to qualify for a mortgage.

Also the negative impact these changes will have on many different industry sectors due to decreased competition, including The Mortgage Group’s President, Mike Boyle, as noted in his letter of outrage to MP, Len Webber. In a nutshell, the new mortgage stress test qualification process is bringing outrage.

Finance Minister Bill Morneau recently announced new mortgage qualifying “stress test” measures for potential home buyers which will begin October 17, 2016.

The stress test applied will be that borrowers will be tested against their ability to pay their mortgage if the actual rate was as high as the big bank’s five year posted mortgage rates. On average the five year rate hovers around 4.64 percent.

Finance Minister, Bill Morneau feels that these are necessary measures even though he says the Canadian housing market is sound. "Overall, I believe the housing market is sound, but as minister of finance, I want to make sure we are proactive in assessing and addressing the factors that could lead to excess risk."

Most experts disagree though.

The consensus among industry experts is that these measures won’t have the desired effect on foreign investment, market control, or stabilizing the Canadian home buyer market in general, including Will Dunning, chief economist at Mortgage Professionals Canada.

In fact, the new stress test measures will have at least three substantially negative effects on Canadians, not the least of which is excluding a large percentage of first-time home buyers from qualifying for a mortgage.

The impact of these changes are so profound that our own President, Mike Boyle, has been compelled to write a letter to his MP, Len Webber. In his letter, Mr Boyle describes his outrage at these changes and the three areas that will be hit hardest or negatively.

Here is an excerpt from that letter:

I am writing today to express my outrage at the recent changes made by the Department of Finance with respect to qualification for mortgage borrowers. The stakeholders who were not consulted were blindsided by these rule changes and the consequences are many.

Please take a moment to download Mr Boyle’s complete letter and let us know what you think in the comments section of this Facebook post.

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