TORONTO -- The Ontario Real Estate Association is calling for less stringent mortgage rules in a rebuttal aimed at the head of the Canada Mortgage and Housing Corp.

OREA chief executive Tim Hudak says in a letter to federal policy-makers that Ottawa should consider restoring 30-year insured mortgages, ease up on the interest rate stress test, and eliminate the test altogether for those renewing their mortgage with a different lender.

In the July 18 letter to the House of Commons finance committee, Hudak said policy changes are needed to counter a downward trend in home ownership.

"Canadians, especially young millennial families looking to buy their first homes, now face structural barriers to home ownership that won't go away on their own."

The letter takes aim at comments made by CMHC president CEO Evan Siddall, who has been a vocal critic of those lobbying for eased rules.

Siddall argued in a May letter to the finance committee that allowing 30-year insured mortgage terms, lowered to 25-year maximum terms in 2012, would stimulate increased borrowing and inflate prices, but Hudak contends that government should only aim to tamp down on risky mortgages and not borrowing in general.

He says the ban on 30-year mortgages is untargeted and penalizes younger buyers who have more time to pay off the debt, though Siddall argued the best way to improve affordability for all buyers is to push home prices lower through borrowing restrictions.

On the stress test, which requires would-be borrowers to show they could still make payments if faced with higher interest rates or less income, Hudak said it is limiting buying power, pushing down home sales, and limiting families from upgrading homes to create more entry options.

He says requiring borrowers to prove they could handle a two per cent interest rate hike is arbitrary, too harsh, and should be made more flexible.

OREA's pushback comes ahead of a fall election campaign in which housing affordability is expected to be a hot topic.

Siddall argued that the test was doing what it was supposed to by reducing borrowing and easing the bubble created by the debt-fuelled real estate boom. He pointed out how gross household debt has increased to $2.2 trillion or to 178 per cent of income last year, from $539 billion, or 106 per cent of household income in 1998, posing serious potential consequences to the economy.

On the stress test for mortgage renewals, which only apply when borrowers want to switch lenders, Hudak argues the requirement limits competition and so makes mortgage payments less affordable.

Siddall said the renewal rule, implemented by the Office of the Superintendent of Financial Institutions, aims to prevent competition among banks for weaker credit, and effectively requires lenders to support their existing customers through a crisis.

Hudak also sought to rebuff the direct criticism Siddall levelled at OREA and other real estate associations as having "plain self-interest" in lobbying for measures that would raise home prices.

"In his letter, Mr. Siddall also claimed we have bad motives for advancing our policy recommendations, and he has done this even more pointedly in other forums," wrote Hudak.

"We believe that our observations and recommendations are supported by solid evidence and reasoning."