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

Surrey cold-case murder is Crime Stoppers’ ‘Crime of the week’

Police have yet to arrest a suspect in the April 24, 2011 murder of Devon Allaire-Bell, 19, in Newton

Surrey’s ready for winter with 17,000 tonnes of salt, online snow plow tracker

A sidewalk-clearing pilot project is continuing in City Centre this year

TransLink to discuss proposed bus-route changes at White Rock forum

“It is important that the opinions of riders are heard,” says mayor

Singer Bif Naked among speakers at West Coast Women’s Show

Annual event takes place Oct. 18-20 at Tradex in Abbotsford

White Rock house targeted in 2016 drug raid forfeited to province

Supreme Court proceedings regarding Parker Street property favour director of civil forfeiture

Fashion Fridays: 5 things to remove from your closet

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

Kawhi Leonard, former Toronto Raptor, welcomed back to Vancouver at pre-season game

Fans go wild at pre-season game between L.A. Clippers and Dallas Mavericks at Rogers Arena

Greens and NDP go head to head on West Coast; Scheer takes fight to Bernier

Trudeau turns focus to key ridings outside Toronto after two days in Quebec

Canucks beat Stanley Cup champs 4-3 in a shootout

Leivo nets winner, Vancouver dumps St. Louis for fourth straight win

‘The more you test, the more you find’: Beef recalls a sign of success, experts say

Despite appearances, experts say a recent rise in major recalls is not a sign of food supply problems

Scholars say religious vaccine objections can’t be traced to Biblical sources

Vaccinations are a requirement to attend class in Ontario and New Brunswick, while B.C. launched a demand this fall

ELECTION 2019: How would the major parties address Canada’s housing crisis?

Promises include speculation taxes, more affordable housing, and declaring housing a human right

Workers at four Vancouver hotels ratify contract with higher wages, job security

Unite Here Local 40 president Zailda Chan says it’s the first hotel strike in Vancouver in nearly two decades

Japanese buyer expands wood pellet contract with B.C.’s Pinnacle

Mitsui and Co. increases contract with Interior energy producer

Most Read

l -->