Mortgage broker Dominion Lending Centres is warning the federal government that another round of lending restrictions will further stifle the home ownership dreams of Canadians and potentially stunt the economic contributions of the housing sector.
The company ran full-page newspaper ads on Tuesday asking Prime Minister Justin Trudeau and Finance Minister Bill Morneau to change mortgage rules that Dominion Lending says have “reduced the average Canadian family’s purchasing power by upwards of 20 per cent.”
CEO Gary Mauris said the ads and a website called, NewRulesHurt.ca, are being launched as the Office of the Superintendent of Financial Institutions (OFSI) is considering adding even more rigour to last year’s mortgage stress testing.
If that happens, applicants for uninsured mortgage, who have a 20 per cent down payment, will have to qualify at 2 per cent above the posted rate. It will make qualifying for a loan more difficult to a larger swath of Canadians, said Mauris.
Canadian default rates are among the lowest in the world, he said.
OFSI head Jeremy Rudin said Tuesday that he expects to finalize lending guidelines by the end of the month and that they would take effect by the end of the year.
It would probably take about six months to see what expanded mortgage restrictions will do to homebuyers and the economy, but changes in the past year, including the introduction of a foreign buyer’s tax in Ontario, “had a substantial impact,” said Mauris.
“You’re in a market in Ontario where you see the reversal of a very strong economy in the housing sector that turned almost instantly. We expect to see substantial damage if and when they implement these stress tests on all mortgages fairly quickly,” he said.