Should Canada ditch the mortgage stress test? What experts are saying [Video]

Despite recent interest rate cuts, the Canadian real estate market remained slow this summer.

This has prompted some in the industry to call for an end to the stress test – a tool that determines whether a person can qualify for a mortgage. But would it be a good idea?

Christopher Alexander, president of Re/Max Canada, is among those calling for an end to the stress test.

“First-time homebuyers have all but disappeared from the marketplace. And I think that’s largely due to the stress test which is still in place. It was introduced in 2017 in anticipation of rising interest rates,” he told Global News.

Before someone borrows money from a federally regulated lender, like a bank, they need to prove they can afford payments at a qualifying interest rate. Typically, this rate is higher than the actual rate in a mortgage contract.

This is referred to as the “stress test.”

The stress test requires borrowers to qualify for …