How do homebuyers feel about the recent mortgage changes?

by Justin da Rosa12 Dec 2016
About exactly as you think they’d feel: Worried

Buyers who require mortgage insurance now have to qualify at the higher Bank of Canada benchmark rate, which has created unease among Canadians, according to a recent Mortgage Professionals Canada report.

Those who plan on ponying up less than 20% -- and therefore would require mortgage insurance through CMHC or one of the private insurers – expect their ability to purchase a home will be “severely impacted,” according to the MPC report.

They also believe the housing market will be materially impacted and that the economy overall will be negatively affected.

Those buyers also agree it will now be harder to purchase a home in their sought-after neighbourhood.
Perhaps unsurprisingly, those who plan on plunking down at least 20% -- and therefore avoid having to purchase mortgage insurance – believe the housing market will be positively impacted.

“Those potential buyers also believe the changes will level the playing field in the housing market. The overall impression from this part of the survey is that individuals who might be subject to the stress testing (at the posted rate) may have a good understanding of the various impacts,” Will Dunning, MPC chief economist, said in the report. “But people who will not be tested have no particular need to think about the impacts, and for many of them their opinions are probably not based on careful reflection.

“To reiterate the findings: people who expect that they would be subject to the stress test expect to experience substantial negative impacts on themselves and that there will be negative impacts in the housing market and the broader economy.”
 

COMMENTS

  • by Robert Schmidt - Broker 12/12/2016 11:40:21 AM

    The checks and balances which have been put in place are there to support stability and control in the real estate market. Restrictions and requirements for homebuyers will ensure qualified buyers have sufficient equity and the ability to finance their home purchase over the long term thereby protecting themselves and the banks from default. This is precisely what we need in the market versus the " Wild West Mortgage schemes " of the US which we witnessed back in 2008 which lead to a collapse in the market.

  • by Ken Davreux 12/13/2016 4:28:44 PM

    Robert I am afraid I strongly disagree with you! The government is requiring buyers to work with a potential interest rate that I don't see happening in the foreseeable future. Yet they have to qualify at this much higher rate (which is currently about double to nationally posted 5 year rates). This is plain and simply a move by the government to put fairly strong brakes on the housing market.

    I would like to see how people would react to the government changing the tax benefits of capital gains if the stock market was getting overheated, as to me that is what the government is doing to the housing market.

  • by Pedro M 12/13/2016 11:40:13 PM

    I cannot scream this loud enough from the roof tops of all those homes I cannot afford. It is NOT the Canadian residents who need checks and balances. It is the foreign buyers we need to put checks and balances on. I ask the same question every time this issue comes up. If foreign buyers can come in and pay cash for a million dollar home, why is our gouvernment wasting time and money of changing Canadian mortgage rules. LOOK at the what happened with Vancouver's housing market, when their gouvernment put road blocks in place directed at foreign buyers. It did NOT impact their economy, it only brought down the price of homes so that Canadian could once again buy a house in the city they call home. I realize cooking off housing prices will bring down the money a Realestate agent makes, but please, for the love of future generations, stop the insanity that we call a housing market by blocking foreign buyers from out bidding Canadian families on homes that should cost half of what they are selling for.

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