RBC CEO urges caution as Canada mulls adjusting mortgage stress test
The chief executive of Canada’s biggest bank says the federal government need to exercise caution as it considers adjusting the mortgage stress test that has loomed over the housing market and rankled the real-estate industry.
Canada has mortgage stress tests in place for both loans that are insured against the borrower defaulting and those that are not, with both measures aimed at ensuring homeowners can meet their obligations to federally regulated lenders such as banks if circumstances change. “The stress test certainly delayed purchases, caused consumers in Canada to look at less expensive homes, and to adjust their desire for the cost of the home they’re purchasing, or delay,” McKay told a conference in Toronto. “And I think we have to be a little bit careful how we adjust it. But if done in the right way, and with the right objectives, can be achieved.”
Federally regulated financial institutions, such as RBC, saw mortgage originations slow when the uninsured stress test came into effect at the start of 2018.
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