The War Against Canadian Home Ownership Version 2018
Here is "the skinny," the proposal by Canada's banking regulator to expand "stress tests" for mortgage borrowers will reduce how much house Canadians can afford by 21 per cent, says a new report from independent mortgage comparison site Ratehub.
Reducing affordability by that much is likely to lead to a 10- to 20-per-cent decline in house prices.
"If implemented in their current form, the effects of these changes will be significant. When buyers can qualify for less mortgage financing, it puts significant downward pressure on home prices."
"Properties worth more than $1 million will be most affected by this change, which means that Toronto and Vancouver will be the geographies most impacted."
Canada's federal banking regulator, OSFI, has proposed a "stress test" for borrowers of uninsured mortgages, where the borrower puts 20 per cent or more down. That follows a new rule introduced last fall which requires borrowers who put less than 20 per cent down to pass a similar stress test.
About 46 per cent of mortgages outstanding in Canada are uninsured, with a 20-per-cent or more down payment, according to DBRS.
A household with an annual income of $100,000 and a fixed-rate 25-year mortgage at 2.84 per cent can afford a house worth up to $726,145 currently, Ratehub calculated.
Under the new rules, the same household would be able to afford only $573,791, a reduction of more than $150,000.
Trudeau's 'war on homebuyers':
The new rule would come amid a slowdown in Toronto's previously red-hot housing market, which has seen the average price drop by more than 20 per cent since a peak in April following a spate of new draconian housing rules introduced by the far left Ontario government this spring, 2017.
It also comes amid cooler sales and price growth in Vancouver (really, tell that to Metro Vancouver home buyers), following the introduction of the infamous foreign buyers' tax there last year.
"Anyone working in the mortgage industry question if now is an appropriate time to introduce more regulation which will cool markets across the country further."
"We have yet to see the full impact of regulation added over the last 12 months, combined with rising interest rates. A more prudent approach would be to let these new variables work their way through the real estate markets, and decide if further tightening is required."
If implemented in their current form, the effects of these changes will be staggeringly negative for Canadians but good for banks and the wealthy.
Other industry insiders have used stronger words. Tim Hudak, head of the Ontario Real Estate Association, has said the proposed rules, combined with all the new regulations already in place, amount to "a war on first-time homebuyers."
Hudak has called on all levels of government to "hit the brakes" on any further tightening of housing rules. nstead, he says governments should loosen regulations and administration to allow more housing to be built.
The proposal for even tighter mortgage rules comes as policymakers grow increasingly worried about Canadian household debt, which reached a new record high in the second quarter of this year, at around $1.68 of debt for every dollar of disposable income.
Numerous institutions, from Trudeau's Parliamentary Budget Office to the globalist agenda driven Bank for International Settlements, have warned that Canada risks a credit crisis due to excessive debt. We at BCHH say - that's a load of poppycock!
Many far left talking heads in love with their own voices have suggested Canadians would not be able to handle their debt payments if interest rates were to normalize — something that appears to be starting already, with the Bank of Canada raising interest rates twice this summer as the economy grew faster than expected.
“We will continue to assess the situation, but no changes are contemplated in provincial requirements at this time.”
Alisa Aragon, mortgage expert at Bridgestone Financing Pros with DLC Mountain View Ltd., confirmed that credit unions do not qualify applicants at the higher rate, but offered a warning to buyers before they rush out to apply for credit union mortgages.
“Credit unions could be an alternative to other lenders if you don’t qualify with the stress test, but in certain cases the rates might be higher at credit unions, or the income ratios might be tighter. While you might qualify at a credit union, our job as mortgage experts is to get the best mortgage with the best rates and terms, whether that is at a credit union, banks, monoline lender or private lender.”
- February 2018 (2)
- January 2018 (2)
- December 2017 (1)
- November 2017 (2)
- October 2017 (2)
- August 2017 (3)
- June 2017 (3)
- April 2017 (3)
- March 2017 (3)
- February 2017 (1)
- January 2017 (3)
- December 2016 (4)
- November 2016 (2)
- October 2016 (3)
- August 2016 (3)
- July 2016 (1)
- June 2016 (3)
- April 2016 (3)
- March 2016 (3)
- February 2016 (10)
- January 2016 (5)
- December 2015 (1)
- November 2015 (4)
- October 2015 (3)
- September 2015 (1)
- August 2015 (3)
- July 2015 (3)
- June 2015 (10)
- May 2015 (4)
- April 2015 (9)
- March 2015 (3)
- February 2015 (5)
- January 2015 (12)
- December 2014 (7)
- November 2014 (13)
- October 2014 (13)
- September 2014 (9)
- August 2014 (4)
- July 2014 (10)
- June 2014 (12)
- May 2014 (10)
- April 2014 (5)
- March 2014 (23)