The Globe and Mail reports in its Friday, May 24, edition that Canada Mortgage and Housing Corp. chief executive officer Evan Siddall is rejecting calls from the real estate industry to soften mortgage stress tests. The Globe's Janet McFarland writes that Mr. Siddall, in a letter to the House of Commons finance committee, offered an aggressive defence of the controversial mortgage qualification standard, saying it is needed to forestall potentially devastating economic consequences if house prices and debt levels rise even further.
He said, "The mortgage stress test is exactly the kind of policy we need to protect our economy." He drew comparisons to the tulip bulb crisis in the Netherlands in the 17th century, the stock-market bubble of the 1920s and the collapse of the real estate bubble in the United States in 2009. He warned: "Just 10 years after such a crash, we have fallen into the 'this time is different' trap of complacency. We have a responsibility to prevent these tragedies. And while I'm not predicting, it nonetheless could happen here: Of the 46 banking crises for which we have housing data, over two-thirds were preceded by real estate boom and bust cycles."
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