If the Ontario Real Estate Association had its way, it would be easier for people across the country to buy homes. However, given the current global preoccupation with the COVID-19 pandemic, the implementation of one of OREA’s suggestions has been suspended and the others are likely to be set aside for consideration once the government can focus on issues beyond the pandemic.
In July, the chief executive officer of OREA, Wayne Hudak, a former Conservative M.P., wrote to Wayne Easter, the M.P. who chairs the standing committee on finance in the House of Commons to suggest some key changes to federal mortgage rules as a “way of making home ownership affordable and accessible to Canadians.”
OREA, which represents about 78,000 Ontario realtors, advocated for three specific actions:
1. Supporting choice by restoring the option of a 30-year amortization period for people with insured mortgages;
2. Fixing the one-size-fits all mortgage ‘stress test’ by moving to a more flexible and reasonable mortgage stress test than the current one; and
3. Eliminating the stress test for careful savers renewing their mortgage with a different lender, allowing for greater choice in the marketplace. “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,” said Hudak in a news 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for families who are having their dream of becoming homeowners dashed by bureaucratic overreach in the mortgage market, outdated red tape and expensive regulations restricting housing supply and choice across the country.” Research conducted by Navigator and OREA says that 60 per cent of Ontarians support the extended
amortization period for insured mortgages, while 58 per cent of Ontarians between ages 18 and 34 support lowering the minimum qualifying rate for insured mortgages.
Recently, federal plans for the April 6 introduction of a new stress test for insured mortgages were suspended, given the financial challenges of the pandemic.
Providing a 30-year amortization period on mortgages for first-time buyers, i.e., those insured by the Canada Mortgage and Housing Corporation, is still on the table. The last time this was allowed was in 2012. Current homeowners who have uninsured mortgages and 20 per cent equity are already eligible for 30-year amortizations.
A 30-year amortization period for uninsured mortgages makes it easier for first-time home buyers to enter the housing market, because it lowers their potential monthly mortgage payments.
There has been no discussion yet of eliminating the stress test for uninsured borrowers who are planning to switch lenders.
“Once the social distancing requirements begin to ease and the infection numbers drop, the government will have time to turn its attention to other issues,” says Kelly Wilson, co-founder of the Wilson Team of mortgage professionals. “Meanwhile, if you have any questions about these proposed measures or about mortgages in general, please don’t hesitate to call on us. We’re here to help.”