A local mortgage broker says changes to the stress test should help home sales in Steinbach.

Ottawa has announced it will relax the mortgage stress test in April. Even though mortgage rates are currently under three per cent, Ken McAllister explains a consumer must qualify at a rate of 5.19 per cent. Starting in April, that will be relaxed by about 30 basis points to 4.89 per cent.

(Local mortgage broker Ken McAllister)According to McAllister, a mortgage stress test is a simple way of showing that a consumer can continue to afford a home, even if interest rates go up. He notes a lot of people get a five year term for their mortgage. Then, when it is time to renew their mortgage, they may need to pay a higher rate, if rates have gone up.

"The stress test means that when you are buying a house, you have to be able to afford interest rates that are actually higher than they actually are in reality," explains McAllister.

McAllister says the changes coming in April will mean a consumer will be able to afford a little more home. He says he is currently working with a consumer who can afford a home of about $304,000, with a down payment of 10 per cent. But, once the new rules come into play, that consumer may be able to afford the same home, but with only a five per cent down payment.

"It can make a difference to some consumers if they are on the bubble of affordability," says McAllister.

McAllister says he is not surprised by the changes announced for the stress test, but says most people in the mortgage industry are probably not very happy that it was not relaxed even more.

"We're going to be probably pressuring the government to relax that test even more because we feel that home sales are good for the Canadian economy," says McAllister. "We feel that consumers are better off owning a home than renting, in general terms for most consumers."

McAllister says he believes these changes will help home sales in Steinbach.

Meanwhile, Glenn Friesen, Chief Executive Officer for Steinbach Credit Union says it is his opinion that these changes are both modest and reasonable. Friesen says this basically adds about three per cent to what a consumer could qualify for. For example, he says if you could qualify for a $200,000 mortgage, the new rules will mean you can qualify for about $206,000.

But, Friesen says credit unions do not have to follow B-20 stress test rules.

"SCU does our own stress testing," says Friesen. "And our posted rates are our actual rates."

He notes the actual rate for SCU is 2.99 per cent, when most banks are posting 5.19 per cent.

"We're well below that two per cent threshold already, if you compare the two," he says. "So I think that it won't have any impact on our members at all."

Friesen says stress test rules are basically set for hot markets, like Toronto and Vancouver.

"Our Manitoba market is fairly stable," he says. "We apply stress tests based on our Manitoba market and we won't be impacted by this change."