{"id":9904,"date":"2018-08-03T11:11:57","date_gmt":"2018-08-03T18:11:57","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9904"},"modified":"2018-07-25T07:48:57","modified_gmt":"2018-07-25T14:48:57","slug":"canadas-new-mortgage-stress-test-could-have-been-better-designed","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/","title":{"rendered":"Canada’s New Mortgage Stress Test Could Have Been Better Designed"},"content":{"rendered":"

It\u2019s been over six months since the new mortgage stress test rolled out across Canada with the aim of ensuring borrowers would be able to handle higher interest rates. However, one expert says the mortgage regulation needs to be improved to mitigate the impact on home buyers.<\/p>\n

On January 1, the Office of the Superintendent of Financial Institutions (OSFI) implemented stricter mortgage rules that require uninsured home buyers to pass a \u201cstress test\u201d in order to qualify for mortgage financing with one of Canada\u2019s federally regulated banks.<\/p>\n

But, Gregory Kump, chief economist at the Canadian Real Estate Association (CREA), argues that despite its intended effect on borrowers, the stress test only safeguards federally regulated financial institutions (FRFIs).<\/p>\n

To avoid the stress test, home buyers can opt for non-federally regulated financial institutions (non-FSFIs), but they will likely be charged higher lending rates for mortgages compared to FRFIs.<\/p>\n

\u201cSimply put, OSFI\u2019s new stress test means some borrowers are likely taking on debt that is harder to manage than would be the case in a world without the stress test. This means financial risks are merely being shifted away from FRFIs and toward home buyers and non-FRFIs,\u201d Klump writes in a note, published Tuesday.<\/p>\n

The economist writes that OSFI\u2019s motivation for the stress test is to slow mortgage credit growth. He adds that the federal organization is worried about risks to Canada\u2019s financial system, including rising interest rates and the next economic recession.<\/p>\n

If these risks were to manifest, Klump says OSFI would be concerned that big banks would significantly reduce mortgage lending (also known as a \u201ccredit crunch\u201d), making a difficult economic situation more severe.<\/p>\n

\u201cOSFI\u2019s mandate is limited solely to safeguarding Canada\u2019s financial system from risks. It pays absolutely no mind to how tighter mortgage regulations may affect home sales activity or prices,\u201d writes Klump.<\/p>\n

In addition, Klump says the stress test does not consider the effect that international financial markets could have on Canada\u2019s economy.<\/p>\n

He notes that an increase in international interest rates would impact Canadian interest rates. And, if more prospective mortgage applicants could not qualify for financing due to the stress test, that would add more pressure on an already difficult economic situation.<\/p>\n

\u201cShould such a scenario occur, my faith in OSFI to quickly relax mortgage regulations may not be as strong as yours. Regardless, making good policy is difficult, but that doesn\u2019t mean policymakers shouldn\u2019t try. To my mind, the stress test could have been better designed in the first place,\u201d writes Klump.<\/p>\n

This Chief Economist Says Canada’s New Mortgage Stress Test Could Have Been Better Designed<\/a> by Kerrisa Wilson | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s been over six months since the new mortgage stress test rolled out across Canada with the aim of ensuring borrowers would be able to handle higher interest rates. However, … [read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-9904","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"\nCanada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Canada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"It\u2019s been over six months since the new mortgage stress test rolled out across Canada with the aim of ensuring borrowers would be able to handle higher interest rates. However, … [read more]\" \/>\n<meta name=\"twitter:creator\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:site\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rory Clipsham\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/#article\",\"isPartOf\":{\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/\"},\"author\":{\"name\":\"Rory Clipsham\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"headline\":\"Canada’s New Mortgage Stress Test Could Have Been Better Designed\",\"datePublished\":\"2018-08-03T18:11:57+00:00\",\"mainEntityOfPage\":{\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/\"},\"wordCount\":456,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"articleSection\":[\"Mortgage\"],\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/\",\"url\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/\",\"name\":\"Canada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#website\"},\"datePublished\":\"2018-08-03T18:11:57+00:00\",\"breadcrumb\":{\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/#breadcrumb\"},\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"http:\\\/\\\/www.roryc.ca\\\/blog\\\/2018\\\/08\\\/canadas-new-mortgage-stress-test-could-have-been-better-designed\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Canada’s New Mortgage Stress Test Could Have Been Better Designed\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/\",\"name\":\"Rory C Real Estate | Oakwyn Realty\",\"description\":\"Rory C Real Estate Updates | Home Selling & Buying\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-CA\"},{\"@type\":[\"Person\",\"Organization\"],\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\",\"name\":\"Rory Clipsham\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-CA\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"contentUrl\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\",\"width\":504,\"height\":504,\"caption\":\"Rory Clipsham\"},\"logo\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/wp-content\\\/uploads\\\/2019\\\/10\\\/RoryC-white-w-tagline.jpg\"},\"sameAs\":[\"http:\\\/\\\/www.roryc.ca\\\/\",\"https:\\\/\\\/www.facebook.com\\\/pg\\\/BurnabyandCoquitlamHomes\\\/about\\\/?ref=page_internal\",\"https:\\\/\\\/www.instagram.com\\\/roryclipshamhomes\\\/\",\"https:\\\/\\\/x.com\\\/RoryClipsham\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Canada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/","twitter_card":"summary_large_image","twitter_title":"Canada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty","twitter_description":"It\u2019s been over six months since the new mortgage stress test rolled out across Canada with the aim of ensuring borrowers would be able to handle higher interest rates. However, … [read more]","twitter_creator":"@RoryClipsham","twitter_site":"@RoryClipsham","twitter_misc":{"Written by":"Rory Clipsham","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/#article","isPartOf":{"@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/"},"author":{"name":"Rory Clipsham","@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"headline":"Canada’s New Mortgage Stress Test Could Have Been Better Designed","datePublished":"2018-08-03T18:11:57+00:00","mainEntityOfPage":{"@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/"},"wordCount":456,"commentCount":0,"publisher":{"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"articleSection":["Mortgage"],"inLanguage":"en-CA","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/#respond"]}]},{"@type":"WebPage","@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/","url":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/","name":"Canada's New Mortgage Stress Test Could Have Been Better Designed • Rory C Real Estate | Oakwyn Realty","isPartOf":{"@id":"https:\/\/www.roryc.ca\/blog\/#website"},"datePublished":"2018-08-03T18:11:57+00:00","breadcrumb":{"@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/#breadcrumb"},"inLanguage":"en-CA","potentialAction":[{"@type":"ReadAction","target":["http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/"]}]},{"@type":"BreadcrumbList","@id":"http:\/\/www.roryc.ca\/blog\/2018\/08\/canadas-new-mortgage-stress-test-could-have-been-better-designed\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.roryc.ca\/blog\/"},{"@type":"ListItem","position":2,"name":"Canada’s New Mortgage Stress Test Could Have Been Better Designed"}]},{"@type":"WebSite","@id":"https:\/\/www.roryc.ca\/blog\/#website","url":"https:\/\/www.roryc.ca\/blog\/","name":"Rory C Real Estate | Oakwyn Realty","description":"Rory C Real Estate Updates | Home Selling & Buying","publisher":{"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.roryc.ca\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-CA"},{"@type":["Person","Organization"],"@id":"https:\/\/www.roryc.ca\/blog\/#\/schema\/person\/0672b9777e67473b9bd9247df49499c7","name":"Rory Clipsham","image":{"@type":"ImageObject","inLanguage":"en-CA","@id":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","url":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","contentUrl":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg","width":504,"height":504,"caption":"Rory Clipsham"},"logo":{"@id":"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/10\/RoryC-white-w-tagline.jpg"},"sameAs":["http:\/\/www.roryc.ca\/","https:\/\/www.facebook.com\/pg\/BurnabyandCoquitlamHomes\/about\/?ref=page_internal","https:\/\/www.instagram.com\/roryclipshamhomes\/","https:\/\/x.com\/RoryClipsham"]}]}},"_links":{"self":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/9904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/comments?post=9904"}],"version-history":[{"count":1,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/9904\/revisions"}],"predecessor-version":[{"id":9905,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/posts\/9904\/revisions\/9905"}],"wp:attachment":[{"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/media?parent=9904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/categories?post=9904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.roryc.ca\/blog\/wp-json\/wp\/v2\/tags?post=9904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}