CanWise Financial president James Laird has called on the Canada Mortgage and Housing Corporation to remove the stress test requirement for borrowers who are considering changing their lenders of choice.
While well-intentioned, the B-20 qualification rules have proven to be a significant roadblock for otherwise financially capable buyers, Laird argued.
“The CMHC unintentionally made it harder for Canadians to switch lenders with the stress test,” he said earlier this week.
“For homeowners wishing to switch lenders at renewal they must first undergo the stress test again and requalify. However, those renewing with their existing lenders do not have to requalify. CMHC should remove the stress test for Canadians looking to switch lenders at renewal.”
This stood in stark contrast to consumers’ sentiments collated by CMHC. The Crown corporation’s recent survey has found that 65% of buyers believe that the stress test serves a most vital function: preventing Canadians from taking out mortgages that they can’t afford.
Laird also urged CMHC to raise the home value limit used to qualify for high-ratio insurance.
“The CMHC should index the home value limit based on the average home price in each city. Currently the maximum home value that allows a buyer to put less than 20% down is $999,999, which is below the average price of a detached home in many big cities,” Laird explained.
“The CMHC should provide some relief by allowing higher home values to qualify for high ratio insurance in expensive urban markets.”