Housing affordability is one thing Canadians continue to struggle with. Not only are prices high, but salaries have not kept pace with the rising costs. And on top of that, policies like the mortgage stress test prevent people from entering the market altogether.
That’s why the Ontario Real Estate Association (OREA) is urging the federal government to make homeownership more affordable.
In a letter to the Standing Committee on Finance dated Thursday, OREA CEO Tim Hudak recommended key changes that should be implemented as soon as possible. This includes offering a 30-year amortization period for insured mortgages, softening the mortgage stress test rules, and eliminating the stress test for mortgage renewals.
“These restrictions, in particular, are unfairly disadvantaging home buyers, especially millennials looking to enter the market for the first time or young families looking to move up,” Hudak said in a press release. “Ontario Realtors are continuing to fight for families who are having their dream of becoming homeowners dashed by bureaucratic overreach in the mortgage market, outdated red tape and expensive regulations restricting housing supply and choice across the country.”
Hudak’s letter was a direct response to the Canada Mortgage and Housing Corporation’s stance on the mortgage stress test. In May, CMHC’s president and CEO Evan Siddall wrote his own letter to the Standing Committee on Finance stating, “The stress test is doing what it is supposed to do.”
OREA has previously called for the stress test to be reviewed, and Hudak’s recent letter had a similar sentiment. The CEO noted that the stress test implementation was “disastrously flawed,” and called the federal government to replace it with a “more flexible and reasonable test than the current one.”
Hudak made it clear that OREA is in support of measures that “ensure people do not take on mortgages they cannot afford.” However, the organization disagrees with the current policies that are boxing Canadians out of real estate.
Not offering a 30-year amortization for insured mortgages, for instance, means it will take young families and first-time buyers longer to enter the market. This is because these groups make up the majority of insured borrowers, compared to uninsured borrowers, Hudak wrote.
“The decline in homeownership has multiple causes and getting home ownership growing again is going to take a coordinated program of policy changes, at every level of government,” Hudak said.
OREA and Navigator conducted research to back up their recommended changes. They found that 60 per cent of Ontarians support 30-year amortization period for insured mortgages and 58 per cent of young Ontarians (aged 18-34) support lowering the minimum qualifying rate for uninsured mortgages.
Despite the difficulties of becoming a homeowner, the Canadian dream of homeownership isn’t dead. More Canadians are moving away from urban centres in order to find affordable housing, and some are considering recreational homes or tiny houses as cheaper alternatives.