Access to Mortgage Financing a Growing Problem for Home Buyers
OTTAWA, ON – February 8, 2019 – The Canadian Home Builders’ Association (CHBA) recently surveyed its home builder and developer members across Canada to assess the impact of the federal government’s mortgage stress test, introduced just over one year ago.
The survey results point to growing consumer difficulties when it comes to securing a mortgage.
Nine in ten builders report that their customers experienced more difficulty when qualifying for a mortgage in 2018 than in the previous year. And 84 percent of builders also report an increase in the number of completed home purchase agreements that subsequently failed due to a financing problem.
As a result, they are also reporting a 33 percent drop in first-time homebuyers.
CHBA CEO Kevin Lee stated, “We know why the stress test was put in place, but given that economic and housing market conditions have changed, and considering the impact that all of the mortgage rule changes have had on first-time buyers, we do think it’s time for some policy adjustments.”
It is clear the government is engaged on the issue of housing affordability too, as it has launched a Housing Affordability Caucus. Also, on January 22nd, in a speech in Aurora, Ontario, Minister Morneau noted that affordability is a challenge for millennials, and that the federal government was concerned and looking at options to address it.
CHBA has submitted its recommendations to the Minister on how the federal government can best address this situation in the upcoming budget. “CHBA has put forward two constructive recommendations to the government that could help buyers while posing limited additional financial risk. Equifax data shows that young people are in fact the lowest risk cohort in terms of mortgage arrears, yet they are the most affected by the mortgage rule changes,” Lee added.
“Our recommendations include restoring 30-year mortgages for first-time home buyers and making some adjustments to the current stress test now that the market has changed.”
Lee also noted that, “CHBA has been pleased to have the opportunity to meet with various government officials, as others have, to discuss options. While we have no idea which, if any, policy measures the government will act on, we are encouraged that it has recognized that this is an important issue.”
About the Canadian Home Builders’ Association
The Canadian Home Builders’ Association (CHBA) is the voice of the residential construction industry in Canada, representing more than 8,500 member firms across the country. Our membership spans new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders, and other professionals in the housing sector.
For more information:
David Granovsky, Director, Government Relations
Office: (613) 230-3060 ext. 241
Mobile: (613) 617-3657