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% 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%, up from 166.6% 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.