Regulators should reconsider a stress test for uninsured mortgages that was imposed amid an already slowing housing market and that has helped fuel an alternative-lending boom, a Canadian Imperial Bank of Commerce economist said Tuesday.
Tal’s comments come as the housing market has cooled, but as some Canadians are still finding real estate out of their price range. In its budget last month, the federal government introduced a first-time homebuyer incentive program to try to give those would-be owners a hand. “During 2018, growth in mortgage originations continued to decline,” Tal wrote. “The value of new mortgages fell by eight per cent during the year. Note, however, that the slowing in the pace of mortgage origination growth started well before B-20 was introduced.”The stress test was part of a revised guideline for residential mortgage underwriting, which was known as B-20.
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