Amid calls for relaxing some of the B-20 provisions, the federal government should clarify what the ultimate goals of the regulations are prior to any adjustments, Equitable Bank’s Andrew Moor argued.
“I think before you start tweaking, you’ve got to try and understand what the regulators are trying to achieve,” the Equitable Group CEO said last week.
“It’s not entirely clear what the regulators are trying to achieve, frankly,” he added. “While this was laid out as an OSFI initiative — and it is an OSFI initiative — it’s got broader policy implications for housing at the federal government level.”
One aspect of B-20 that Ottawa should address is the significant impact upon particular sectors.
“My concern about B-20 and the stress test generally is that I think it potentially disadvantages certain groups of people from buying houses in the communities where we’d all like to live, and it makes it easier for people on a salary to buy a house compared to people who are self-employed,” he stated in an interview with the Financial Post.
Earlier this year, the Canada Mortgage and Housing Corp. defended the price deceleration brought about by the policy regime as a “helpful intended consequence.”
In late June, the Bank of Canada lowered the five-year benchmark qualifying rate from 5.34% to 5.19%. This was the first cut since September 2016.
However, industry players noted that any positive impact remains to be seen.
“It allows someone purchasing to buy a little bit more but it’s not that significant,” Mortgages of Canada CEO Samantha Brookes told CBC News. “Consumers are in this wait-and-see pattern — it’s still difficult to get into the market because that stress test is there.”
“This 15-basis point drop in the qualifying rate will not turn the housing market around in the hardest-hit regions, but it will be an incremental positive psychological boost for buyers,” Dominion Lending Centres chief economist Sherry Cooper wrote in an analysis. “It should also counter, in some small part, what’s been the slowest lending growth in five years.”