TORONTO — A new stress test for all uninsured mortgages is unnecessary and could increase costs for homebuyers, a report by the Fraser Institute said Wednesday.Study author Neil Mohindra wrote the proposed stress test “will do more harm than good” by limiting access to mortgages for some homebuyers.“The mandatory standard for stress testing could result in a less competitive and more concentrated mortgage market,” he wrote in the report.The study comes as the federal Office of the Superintendent of Financial Institutions finalizes new lending guidelines.Among the changes being contemplated is a requirement that homebuyers who have a down payment of 20 per cent or more and do not require mortgage insurance still have to show they can make their payments if interest rates rise.The head of OSFI has said that Canada’s banking regulator wants to reduce the risk of mortgage defaults because of high levels of household debt.“We are not waiting to see those risks crystallize in rising arrears and defaults before we act,” OSFI head Jeremy Rudin said last week.Canadian household debt compared with disposable income hit a record high in the second quarter. Statistics Canada reported last month that household credit market debt as a proportion of household disposable income increased to 167.8 per cent, up from 166.6 per cent in the first quarter.However, Mohindra said that instead of a prescriptive test, OSFI could use its existing powers to fix what it believes are deficiencies in policies and procedures.The Bank of Canada has raised its key interest rate target by a quarter of a percentage point twice this year.The increases have pushed up the big bank prime lending rates which are used to determine rates for variable-rate mortgages and lines of credit.The Fraser Institute is an independent, non-partisan organization that tends to prefer free-market policies over government regulation.
Preliminary results of a joint UN survey carried out by the Palestinian Central Bureau of Statistics, the World Food Programme (WFP), the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), and the Food and Agriculture Organization (FAO) found that 1.6 million people – or 34 per cent of households – were food insecure in 2012. This represents a “dramatic” rise from 27 per cent in 2011, stated a joint news release from WFP and UNRWA. Contributing factors include high unemployment rates, stagnant economic growth, the financial problems of the Palestinian Authority, the continued Israeli occupation of the West Bank and the six-year blockade of Gaza.WFP Executive Director Ertharin Cousin and UNRWA Commissioner-General Filippo Grandi today visited a Bedouin village between Jerusalem and Jericho where a food distribution carried out jointly by the two agencies was taking place.“High food prices and low wages mean that 1.6 million Palestinians don’t know from where their next meal is coming,” said Ms. Cousin. “Yet food security is security. Food security is a vital component for sustained peace across the region.” Ms. Cousin also welcomed a new agreement with UNRWA that will strengthen cooperation in Palestine and throughout the region and address the urgent needs of the population.In nearby Jericho, she met shoppers using electronic vouchers from WFP to buy olive oil, salt and other groceries, most of which are produced locally in Palestine. In the past three years, WFP has injected more than $100 million into the Palestinian economy through local purchase and the redemption of electronic food vouchers. This investment supports local businesses and generates employment.WFP reaches approximately 650,000 food-insecure, non-refugee households in Palestine. Meanwhile, UNRWA provides food assistance to more than one million food-insecure Palestine refugees across the Middle East.During the visit to the village of Khan al Ahmar, the two officials signed a Memorandum of Understanding, in an agreement which will deepen and expand ties between their agencies.“As well as cooperating more in the fields of food security and nutrition, we can share expertise in logistics, supply chain management and other initiatives, not just in Palestine, but regionally, particularly as we face up to the challenge of the Syria crisis,” said Mr. Grandi.