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Financial Outlook with Jean-Francois Perrault, Chief Economist Scotiabank

Following are the highlights from a telephone conversation with Jean-Francois Perrault, Chief Economist Scotiabank and John Webster, President and CEO Scotia Mortgage Corporation which took place on Thursday, April 9, 2020 at 4:30 p.m.

First, it’s not all bad news. While I’ll have to include some unpleasant information in order to provide a complete picture, that is not the focus.

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Adjustments to the Mortgage Stress Test

Adjustments to the “Stress Test” don’t go far enough

Adjustments to the Mortgage Stress Test

In case you missed it, Finance Minister Bill Morneau announced this week that adjustments to the “Stress Test” are coming on April 6th. While the government says the change will make the stress test qualifying rate more responsive to market conditions, what does that really look like?

On the bright side, this new qualifying rate will probably be lower by around 0.30%.  This will increase the amount of a house one can buy by around 5%.  

Example… $500k increases to $525k.  

On the dark side, this isn’t really making a whole lot of difference. I don’t want to sound pessimistic, but I’d like to point out the shortcomings of his announcement. It’s purely political. They said they would do something and I guess, technically they did. But it really has no significant impact. 

Continue reading “Adjustments to the “Stress Test” don’t go far enough”
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