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

Salvation Army closing Nelson thrift store

The Salvation Army has operated in Nelson for 123 years.

Trucking company fined $175K for Lemon Creek fuel spill

Decision handed down last Friday in Nelson court

A literary afternoon with authors Lee Reid and Elizabeth Cunningham

Authors will read and talk about inter-generational connection and education

Habitat for Humanity seeks board members in Kootenays

Helping build affordable homes takes planning, volunteers and commitment

Fashion Fridays: Tammy’s big makeover

Kim XO, helps to keep you looking good on Fashion Fridays on the Black Press Media Network

Ryan nets hat trick in return as Senators beat Canucks 5-2

Ottawa winger received assistance for admitted alcohol problem

Wet’suwet’en hereditary chiefs meet with provincial, federal ministers

Neither party speaking on the groundwork laid for tomorrow’s talks

Speaker ‘will not tolerate illegal activity’ on B.C. legislature grounds, says chief of staff

Chief of staff to the B.C. speaker Alan Mullen says situation with demonstrators appears ‘fluid’

MPs to examine privacy implications of facial-recognition technology used by RCMP

The MPs will look at how the technology affects the privacy, security and safety of children

Dates back to 2009: Calgary police lay charges in fraud involving semi-trucks

Three people from Calgary are facing charges that include fraud over $5,000

Wet’suwet’en hereditary chiefs optimistic ahead of talks with feds, province

Discussions with provincial and federal governments expected to start later today

‘The project is proceeding’: Horgan resolute in support of northern B.C. pipeline

B.C. premier speaks as talks scheduled with Wet’suwet’en hereditary chiefs

Most Read