On Friday, MPC submitted its federal pre-budget recommendations to the House of Commons Standing Committee on Finance (FINA). MPC’s immediate focus on behalf of members is on ensuring the changes to the mortgage stress test qualifying rate, first announced in February by Minister Morneau, are implemented without delay.

As you know, MPC fought for many months for changes to the stress test. We were pleased with the changes, describing them as a “good first step”, and that they were announced during our Hill Day in Ottawa. These changes were expected to have begun in April but were delayed (as much was) because of COVID. As we all know, as of last week the qualifying rate clients must overcome remained 4.94%, while we operate in a sub-2% rate environment.

Our recommendations to the Trudeau Government are as follows.

To help improve housing affordability for aspiring first-time homebuyers and address widening wealth inequality, we recommend that the Federal Government:

1. Immediately implement the previously announced changes, initially intended for implementation on April 6th of this year, to the minimum qualifying rate for both insured and uninsured mortgages (the mortgage “stress tests”), as jointly announced by Minister of Finance Bill Morneau, and the Superintendent of OSFI, Jeremy Rudin, in February 2020. The announced changes remove the Bank of Canada’s posted 5 year fixed mortgage rate from the qualification rate mechanisms;
2. Implement an exemption to the Guideline B-20 stress test for mortgage holders who have completed and met the obligations for a minimum of five years of their original amortization period, and who wish to switch to a different lender upon renewal;
3. Provide qualified first-time homebuyers access to amortization periods of up to 30 years for insured mortgages, matching an amortization already available on uninsured mortgages.
   

Our full submission and reasoning behind each recommendation can be found HERE.

We will be continuing our conversations with policymakers in the coming weeks, including ongoing presentations to parliamentary committees and discussions with relevant ministries.

We thank you for your continued support of MPC and welcome your thoughts.

Paul Taylor
President and CEO
Mortgage Professionals Canada