Last year, the introduction of the mandated mortgage stress test set out by the Office of the Superintendent of Financial Institutions (OSFI) played a role in the significant dip in sales in both resale and new homes. First-time buyers, in particular, either shied away from entering the marketplace or rescinded their offers because they could not pass the test. OSFI claims the test ensures that borrowers are able cope with future unexpected financial challenges. I question OSFI’s logic when it comes to new-construction condominiums.
First-time purchasers are usually at the beginning of their careers, and the condos they want to purchase will take upwards of five years to be ready for occupancy. During those years, buyers will earn equity, advance their careers and make more money. It is unfair to test them now for financial situations that are years away. In addition, we want first-time buyers to be able to take advantage of our incredibly low mortgage rates.
All three levels of new home builder associations, the Toronto and Canadian Real Estate Associations and many mortgage professionals and Canadian banking executives are asking that the test be revisited and amended within the context of what is good for Canadians and Canada as a whole. And what is good for Canada is a steady stream of people buying homes and fueling our economy.