MP for Red Deer-Lacombe Blaine Calkins was at the Red Deer and District Chamber of Commerce on Wednesday, meeting with professionals from the mortgage, real estate and construction industries in our area to talk about the mortgage stress test implemented under the federal liberals, and how they feel it's pushing people out of the housing market.

Basically, the stress test is a way to determine if people would be able to afford their mortgage with an increase in interest’s rates when it comes time to renew.

Under the new Canadian mortgage rules, homebuyers who have a down payment of 20% or more will be subject to a stress test, which uses either 5-year benchmark rate published by the Bank of Canada or customer's mortgage interest rate plus 2%, whichever is the higher.

Calkins says this has a huge impact on people ages 18-35, as most of them would have a tough time coming up with the 20% down payment, let alone more than that. It also means that the down payment they’ve saved won’t necessarily secure them the knowledge that they can afford their house in five years.

“There’s all kind of stories like this where people who used to be able to qualify for a mortgage now no longer can qualify for a mortgage, and it’s keeping people from selling homes, it’s keeping people from moving up from a smaller home to a larger home…it’s just another layer of a wet blanket."

He says the stress test just creates more financial issues for home buyers.

“Most people right now trying to buy a house in Central Alberta, by the time they pay their CMHC fees, by the time they pay their lawyers’ fees, by the time they pay all of their transaction fees they are at a negative equity position. It’s almost like buying a car brand new off the lot and you drive it off and you’re already in a negative equity position on your car. The same thing is happening with new homes in Central Alberta, and it’s an untenable situation that needs to change.”

Calkins says the impact of people not being able to afford homes is already being felt in Central Alberta. He says there have been a number of people losing their jobs and businesses going under in the home building industry due to the lower number of homes being built, as well as real estate agents and mortgage brokers also feeling the hit.