Morneau to assess changes to mortgage stress test
Prime Minister Justin Trudeau has asked Finance Minister Bill Morneau to consider changes to the mortgage stress test that Canada’s real estate industry has criticized for being a drag on the housing market.
A mandate letter sent by Trudeau to Morneau — which was released Friday, along with letters sent to other ministers — says the finance minister will “review and consider recommendations from financial agencies related to making the borrower stress test more dynamic.”
The review was not among the commitments the Liberals made during the fall’s federal election, but the Conservatives had pledged to “fix” the test to help firsttime homebuyers and those renewing their mortgages. Trudeau and the Liberals will need support from the other parties to pass legislation after having their majority in the House of Commons reduced to a minority in October’s vote.
Canada has stress tests in place for home loans that are insured against the borrower defaulting on their payments and those that are not. The insured test was brought in by the finance ministry, while the uninsured one was instituted by a federal banking regulator, the Office of the Superintendent of Financial Institutions.
It was not specified which test the mandate letter refers to, but both can require borrowers to qualify for loans at higher rates than the one on their contract, as it is intended to ensure buyers can meet their obligations to lenders if interest rates rise or if a person’s income is lost or reduced, among other things.
Morneau’s mandate is just one of many that were handed down by the prime minister. Others include:
Deputy Prime Minister and
■
Minister of Intergovernmental Affairs Chrystia Freeland: Take the lead in ratifying the new NAFTA; spearhead work with provinces and territories on wiping out internal trade barriers.
Minister of Small Business,
■ Export Promotion and International Trade Mary Ng: Cut the cost of federal incorporation by 75 per cent, to $50 from $200; take the “swipe fee” on HST and GST for credit transactions; create the “Canada Entrepreneur Account,” which would give up to 2,000 entrepreneurs a year as much as $50,000 apiece to launch a business.
Minister of Labour Filomena
■ Tassi: Increase federal minimum wage to at least $15 per hour; craft protections for employees working via digital platforms; help with giving federally regulated workers a “right to disconnect.”