Difficulties in the housing market are being met with federal programs to make home buying less risky while still getting people in their first homes.
But 147,000 homeowners and potential buyers were ineligible for mortgages based on a newly increased interest test evaluating financial stability introduced at the beginning of 2018.
“What’s the point in making people qualify for a mortgage rate that’s not happening? What it’s done is put home ownership out of reach, by and large, for first time home buyers,” said MP Blaine Calkins for Red Deer-Lacombe.
Sitting two per cent above the mortgage rate, the stress test was meant to prevent homebuyers from taking on too much debt, a prevalent problem in Alberta with a comparatively younger population who tend to spend beyond their means.
This among other federal changes to mortgages have impacted those in the housing industry in Central Alberta. In a homeowner roundtable on Aug. 7, MP Calkins and MP Pat Kelly for Calgary-Rocky Ridge heard from professionals in mortgage, real estate and construction.
“My job as a member of parliament is to take these concerns and voice them in Ottawa, and that’s what we’ve done. The government hasn’t listened, hasn’t responded,” he said.
Though the regulations are meant to cool down the housing market in places like Vancouver and Toronto, it is applied nationally.
The stress test was brought up during Jason Kenny’s campaign as an “unfair” target on Alberta which he promised to stand up against. It was in stark contrast from former premier Rachel Notley, who said the regulations were beneficial if it would limit the high bankruptcy rates of Albertans.
The stress test is also applied when getting a mortgage renewal, and could prevent homeowners from changing companies if they are unable to meet the rate.
“We’re seeing people trapped in their homes. They can’t get their first home, they can’t get out of their current home and move up, their family is growing … simply because of the mortgage rules that have been thrown into place,” MP Calkins said.
Housing and mortgages have not been discussed in the legislature since the UCP government was elected. Albertans revisited the discussion during the roundtable discussion with MP Calkins.
Along with preventing potential homeowners from taking on too much debt, the Liberal Government is rolling out a shared-equity mortgage program for Sept. 2.
But MP Calkins said the issue for homeowners could be resolved by simply lowering the stress test back down by the original two per cent. Instead, this new program takes equity away from the homeowner.
“The stress test was the single biggest issues being in the way of being able to have a rebound in the market here. We’re losing so many jobs but the transaction market is down too and it’s costed us tens of thousands of jobs here in Alberta,” he said.