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.

Just Posted

New residential building under construction at Kerr site

Ground has broken on a four-storey, 44-unit mixed use building

Castlegar police seek dawn home intruder

Man walked into house at 4 a.m., asks son about mother

Kootenay Burlesque Festival returns to Nelson

Over 50 performers will hit the stage at the Capitol Theatre

Four fires still burning in West Kootenay

More than 25 fires were started by lightning in the last week.

Nelson woman celebrated for achievement in literacy

Paulina Mason was honoured by the Columbia Basin Alliance for Literacy

VIDEO: Trans Mountain expansion project gets green light, again

Prime Minister Justin Trudeau announced the decision in Ottawa on Tuesday afternoon

Demonstrators on either side of Trans Mountain debate clash in Vancouver

Crowd heard from member of Indigenous-led coalition that hopes to buy 51% of expansion project

Police investigating fatal collision near Grave Lake

Grave Lake is located approximately halfway between Sparwood and Elkford

Grieving B.C. mom hopes Facebook message leads to new investigation into son’s Surrey homicide

Criminal Justice Branch didn’t lay charges, concluding no substantial likelihood of murder or manslaughter conviction

B.C.’s measles vaccination program gains traction in May

More than 15,000 doses of the MMR vaccine has been administered across the province

B.C. farmers concerned Agricultural Land Reserve changes choking their livelihood

Dozens voice concerns at special meeting hosted on Vancouver Island

UPDATE: Two-year-old involved in Chilliwack pool drowning has died

Toddler was reported to not be breathing as air ambulance called out Thursday afternoon

B.C. high school withdraws notices for temporary dress code

Parents previously told the Interior News they felt there was inadequate consultation over the rules

VIDEO: Toronto Raptors announcer credited with calming crowds after shooting

Matt Devlin, the Raptors’ play-by-play announcer since 2008, was praised for preventing panic from spreading

Most Read