Ontario Real Estate Association chief executive officer Tim Hudak said the federal government’s mortgage means test, which took effect last week, goes too far.
“I think it’s overkill,” the former leader of the Ontario Progressive Conservative Party said in remarks in Owen Sound at the annual general meeting of the Realtors Association Grey Bruce Owen Sound on Tuesday.
Hudak said with the means test the government is punishing “careful savers,” like him and his wife.
He suggested as a result, people will qualify for smaller mortgages, forcing them to borrow at higher rates from secondary lenders, or they won’t buy the home they want, which he warned would hurt the economy.
“Honest to God, I’m really tired of every level of government trying to save us from ourselves,” he said. He quoted Ronald Reagan, whom Hudak said he admired.
“He used to say when governments see a business that’s moving, they tax it. If it’s still moving, then they regulate it. And when they finally bring it to a complete stop, then they start subsidizing it.”
The means test which took effect Oct. 17 is intended to prevent homebuyers from taking on too much debt, leaving them vulnerable to mortgage rate increases. The move is also expected to cool the housing market somewhat.
It would subject all buyers seeking federal mortgage insurance, regardless of the size of down payment, to a mortgage rate means test. In the past if your down payment was at least 20 per cent, no test applied.
The stress test also sets the total allowable amount of household income spent on mortgage payments, heat and taxes and other costs at 39 per cent.
Hudak spoke from the stage in the Harry Lumley Bayshore Community Centre, where local realtor Karen Cox asked him questions. She has twice been president of the local real estate association who now is chair of finance at the provincial real estate board.
Hudak has been CEO of OREA for almost a year. He is leading a the organization as it makes what he described as “bold” changes in the face of threats to the profession — political and regulatory as well as technological.
Later, in an interview, Hudak returned to the stress test for mortgages, which he said was an example of “government developing policy for Toronto and Vancouver and imposing it on Owen Sound and Meaford.”
He said price escalation of homes and the associated risks are lower here. “But it’s going to make it tougher for a new homeowner in Grey and Bruce to get into the marketplace.”
He came to Owen Sound to talk about the “new OREA” which is “pushing to stand up for homeowners and raise standards in the profession,” while keeping in touch with what’s happening outside of Toronto.
Hudak told a room packed with realtors that their association is calling for higher professional standards among realtors and higher fines for realtors who break the rules.
It also has a political action plan, led by a committee it calls the Ontario Realtor Party, to encourage realtors to rub shoulders with political decision-makers and ultimately, to elect more realtors to Queen’s Park.
Hudak said his government experience has shown him that having realtors as government caucus members would offer OREA the best chance of influencing government policy.
“I think the biggest threat is government making knee-jerk decisions that will make it harder for people to buy their first home or to upgrade for a growing family,” he said, noting a provincial election is coming next year.
“We want to make sure the ideas they put forward are good for homeowners and those who want to join their ranks.” He said he wants OREA to be “the most effective lobby in the province.”
There are white papers on the OREA website which Hudak invited realtors to read. They address the rules governing licensed realtors, in the Real Estate and Business Brokers Act, which the provincial government is in the process of rewriting.
Other OREA positions Hudak covered at the meeting:
– OREA opposes the province’s proposal to require home energy audits to be performed before a house is listed for sale on the Multiple Listing Service. Hudak raised the prospect of a senior who’s told she needs $25,000 in energy updates by a shady energy auditor, in the absence of regulation of such auditors, who directs her to hire his family member for repairs.
– OREA supports maintaining the opportunity to allow both buyer and seller to use the same real estate agent, if both sign a form, as the province proposes. Hudak said it protects consumers who want to use a particular agent.
– OREA is calling for at least doubling the maximum fines for breaches of the code of ethics under the Real Estate and Business Brokers Act (REBBA).
– It wants government to give the oversight agency, the Real Estate Council of Ontario (RECO), authority to suspend or revoke registrations or apply terms and conditions, the OREA website says.
– It wants government to give RECO powers to proactively investigate REBBA and Code of ethics violations, the OREA website says.