BILD Lethbridge and the LDAR are calling on the federal government to fix the so-called stress test and go back to allowing a 30 year amortization rate for first time home buyers.
Lethbridge is adding its voice to a growing number of building industry leaders across the country becoming very concerned about the federal government's stiff mortgage rules.
BILD Lethbridge Executive Director, Bridget Mearns says the so-called stress tests are having a significant impact on housing in Lethbridge and government policies need to change. "Government policies, at all levels, play a key role in whether Lethbridge and region citizens can enter homeownership. Housing matters – to everyone, in every community. It matters to the economy, and to the economic prosperity of the Lethbridge region."
A recent report commissioned alongside the Lethbridge and District Association of Realtors (LDAR) shows new home sales in Lethbridge are currently at their lowest level since 2001 and residential resale has decreased 3.6% percent between 2017 and 2018.
The stress tests require mortgage applicants to show they can handle interest rates two percentage points above the current rate. That has resulted in many buyers not being able to enter the market.
Mearns was in Ottawa last week and presented the report to Lethbridge's Member of Parliament. MP Rachael Harder says it's important for Canada's mortgage tole reflect the diversity of the nation's housing markets. "The housing market is regional and should be treated as such."
Mearns meanwhile says when homes aren't being built, it has a major ripple effect and that's happening in Lethbridge.
Some key findings in the report include:
• New home sales are at the lowest since 2001 • Residential resale decreased 3.6% in 2018 from 2017
• Unabsorbed new homes inventory continues to be above the 10 year and over 11% increase from 2017
• Lethbridge is one of the most affordable markets in Canada but the stress test has artificially and dramatically reduced the purchasing power in the market. Following the stress test homebuyers in Lethbridge saw their purchasing power decrease by 17.3%, and an additional 5.5% due to rising interest rates
• Almost 14% of the population in Lethbridge has been priced out of buying an average-priced home in the resale market
• The hardest hit by the stress test are lower income household. 65% of households cannot afford an average single family home.