I’ve only touched on the cost of housing briefly in past opinion columns, but I feel the time has come to explore this subject further..Canada has a housing crisis and governments at all levels aren’t helping. The so-called ‘Stress Test’ imposed by the federal government back in June of 2021 has further exasperated the crisis by limiting Canadians ability to enter home ownership. Believe it or not, Canada needs to build 3.5 million more homes over and above the 2.3 million we would normally build in the next ten years to house Canadians and address affordability..One might suggest that these measures were needed to ensure people weren’t ‘getting in over their heads’ with mortgage payments. Certainly, there were some who were stretching what they could afford. But others may argue that if the Liberal government's out-of-control spending was balanced and if taxes weren’t increased, this wouldn’t be an issue..Mortgage brokers, banks and housing organizations across the country riled against this policy from day one, to no avail. The government, which was elected to represent Canadians wasn’t — and still isn’t — listening. The vast majority of Canadians still prefer home ownership to renting and this policy does nothing more than prolong or even deflate Canadians hope of ever owning their home. And, with less movement of first-time home buyers, rent prices have already began to creep up creating another crisis..So, what are some solutions besides the elimination of this dreaded policy?.First, interest rates should be lowered as soon as possible..Secondly, a return to 30-year amortization periods for all buyers..Third, increase the home price upper limit for insured mortgages by regional markets..Fourth, drop the GST on new homes..These are solid solutions from various industry groups which continue to pressure the Liberal government for change, but to no avail..But one solution that seems to have been overlooked is how credit unions can enhance mortgage approvals, while bypassing the burdensome CMHC stress test. In this ever-changing financial landscape, it's crucial to explore alternative avenues that empower individuals to achieve their dreams of homeownership without more unnecessary hurdles..So, let's dive in and discover how credit unions can play a pivotal role in transforming the mortgage landscape..First and foremost, credit unions are member-owned and operated, which means their primary focus is on the financial well-being of their members rather than maximizing profits. This member-centric approach allows credit unions to take a more personalized and holistic view of each applicant's financial situation, going beyond the rigid criteria of the stress test..By leveraging their local roots and strong community ties, credit unions can develop a deep understanding of the local housing market dynamics. This localized knowledge enables them to assess the true risk associated with mortgage approvals more accurately. Instead of relying solely on a standardized stress test, credit unions can factor in regional economic factors, local housing market trends and even the borrower's employment stability to supply a more comprehensive evaluation..Furthermore, credit unions have the flexibility to adopt innovative lending practices that better suit the unique circumstances of their members. They can use alternative methods of assessing credit worthiness, such as considering rental payment history, utility bill payments, or even evaluating an applicant's employment history stability rather than just focusing on income. This approach considers the borrower's full financial picture..Another crucial aspect where credit unions can be effective is in promoting financial literacy and education. They can help individuals make informed decisions about their mortgage choices. This could include workshops, seminars, and one-on-one financial counseling to help potential homebuyers understand the intricacies of the mortgage process and navigate the complexities of homeownership..In addition, credit unions can play a significant role in supporting responsible lending practices. Rather than encouraging individuals to take on excessive debt or stretching their financial limits, credit unions can emphasize the importance of affordability and financial stability. By offering guidance on budgeting, debt management and long-term financial planning, credit unions can help borrowers make sound decisions that align with their financial capabilities, reducing the risk of default and foreclosure..And credit unions can collaborate with government entities and regulators to advocate for a more balanced and flexible approach to mortgage regulations. By sharing their local insights and experiences, credit unions can contribute to the development of more inclusive and nuanced lending criteria that consider the diverse needs and circumstances of Canadians. This collaboration could lead to a more sustainable and resilient mortgage market, fostering homeownership opportunities while mitigating risks..Sadly, bad policy like the stress test, just creates more hardship for Canadians dreams of owning a home. It’s like duct-taping your loose fender to your car. I just want the Liberal government to listen and reduce our cost of living, not continually increase it..This leads me to the National Energy Code for Canada housing coming soon. But that’s another story.
