IMF urges Canada to stay course despite calls for easing mortgage stress test

The IMF says it would be “ill-advised” to stimulate activity in the sector

The International Monetary Fund says household debt in Canada is still too high to pursue policy changes to encourage more activity in housing markets.

The organization’s report comes on the heels of Conservative Leader Andrew Scheer’s pledge last week to rework the Liberal’s mortgage stress test to make home-buying more affordable for Canadians.

The IMF, however, says it would be “ill-advised” to stimulate activity in the sector, suggesting Canada aim instead for a gradual slowdown in overheated real estate markets to reduce risk to the economy.

The report by the organization’s staff following an official visit to Canada calls for policy priorities that focus on ensuring a sound financial system, enhanced cooperation between federal and provincial governments and structural reforms that target productivity growth.

READ MORE: Mortgage stress test accounts for up to $15B drop in new mortgages in 2018: CIBC

The tightened mortgage rules, brought in by Finance Minister Bill Morneau, mandated would-be borrowers undergo a stress test to determine whether they could still make payments if faced with higher interest rates or less income.

In a report last month that calls for a rethinking of the mortgage stress test, CIBC economist Benjamin Tal estimated the measure accounted for more than half of a $25-billion or eight per cent drop in new mortgages started last year.

“The government is under pressure to ease macroprudential policy or introduce new initiatives that buttress housing activity,” said the IMF in its report.

“This would be ill-advised, as household debt remains high and a gradual slowdown in the housing market is desirable to reduce vulnerabilities.”

READ MORE: B.C. real estate board urges feds to revisit mortgage stress test

The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RCMP urge Williams Lake residents to be cautious as suspect remains on the loose

Man seen speeding on Highway 97 fled from police after collided with RCMP vehicle

100 Mile’s longest-serving radio host continues to be off the air

Larry Rode is still recovering from a stroke

B.C. government eyes antlerless moose harvest increase in bid to save caribou

Antlerless moose hunts reduce predation for threatened mountain caribou, says ministry

UPDATE: Williams Lake RCMP suspend search overnight for suspect on the run

Public asked to keep eye out for suspicous activity

CRD gives final approval for three new wheelchair-accessible trails

The CRD secured $100,000 through a rural dividend grant and matched an additional $30,000

If Trudeau won’t stand up to Trump, how will regular people: Singh

Trudeau did not directly answer a question about Trump’s actions amid protests

As two B.C. offices see outbreaks, Dr. Henry warns tests don’t replace other measures

Physical distancing, PPE and sanitizing remain key to reduce COVID-19 spread

Greater Victoria drive-thru window smashed after man receives burger without mustard

Greater Victoria Wendy’s staff call police after man allegedly rips Plexiglas barrier off window

Murder charge upgraded in George Floyd case, 3 other cops charged

Floyd’s family and protesters have repeatedly called for criminal charges against all four officers

Young killer whale untangles itself from trap line off Nanaimo shore

DFO marine mammal rescue unit was en route as whale broke free from prawn trap line

Racist incident shocks Vancouver Island First Nation

Port Alberni RCMP investigating after video shows truck wheeling through Tseshaht territory

Vancouver Island school principal mourns brother, cousin killed during U.S. protests

Jelks says he’s grateful for the outpouring of support from the community in the wake of this tragedy

RCMP, coroner investigate murder-suicide on Salt Spring Island

Two dead, police say there is no risk to the public

B.C. schools see 30% of expected enrolment as in-class teaching restarts amid pandemic

Education minister noted that in-class instruction remains optional

Most Read