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

WATCH: Washboard Union opens bull riding weekend in Sylvan Lake

Country artists Jason Benoit and Washboard Union played to a full audience Nov. 14

Alberta Justice Minister advocates UCP rural crime plan

Expanded property rights, more power to peace officers, demonetizing scrap mental part of UCP plan

Sylvan Lake artist to perform at BRC cabaret

Dylan Gillett will take to the stage Friday evening after the bull riders have finished

Wolf Creek Public Schools hit by budget cuts, insurance spike

WCPS is facing a sizable shortfall after a $1.8 million cut and $1 million insurance hike

Sylvan Lake Wranglers earn another win at home

The Wranglers defeated the Ponoka Stampeders 3-1, Nov. 10

Abortions rights advocates urge Liberals to turn politics into policy

Conservative Leader Andrew Scheer was pressed to clarify his stance abortion over several weeks

Protesters say Alberta bill would make it harder to access some medical services

The bill would mean a health-care provider could not be sanctioned for refusing to provide a service due to morals

MacLean says “Coach’s Corner is no more” following Cherry’s dismissal from Hockey Night

Cherry had singled out new immigrants in for not honouring Canada’s veterans and fallen soldiers

Rebels ride 3-goal first period to 4-3 win over Brandon

Goaltender Byron Fancy with key saves in third period to save game

Supreme Court of Canada dismisses murder appeals in 2013 Calgary swarming death

Assmar Shlah and Franz Cabrera were convicted in 2016 of second-degree murder

One year on, most oil-and-gas bailout money has moved, federal government says

Sweden’s central bank says it has sold its Alberta-government issued bonds

Ski resorts selling mountain water is a risky move, critics say

Alberta allowed ski resort in Kananaskis Country to sell about 50 million litres to third party

Sportsnet looks at new options for Coach’s Corner time slot, post-Don Cherry

Spokesperson says Hall of Fame feature on tap this weekend after co-host’s firing

Most Read