New rules will impact Saskatchewan ‘needlessly’ - broker

by Ephraim Vecina12 Oct 2016
The Saskatchewan housing market—already on a downward trend for the past 5 years or so—will get hit hard “needlessly” by the new rules governing mortgages in Canada, according to a Regina mortgage broker.
 
“Industry professionals who will be honest with you will tell you our houses have down roughly five per cent in the last five years,” Todd Kristoff told CBC News.
 
Intended to cool down the country’s overheated markets, the federal regulatory changes will take effect on October 17.
 
Would-be home owners would not find the prospect of the 4.64 per cent mortgage rate (mandated by the new rules) encouraging, Kristoff warned.
 
“You have to be able to afford that mortgage at 4.64 per cent, not the contract rate that you're getting, not the rate you end up paying,” Kristoff said. “So, now, across the board, you have to afford that house at 4.64 per cent. So, that really limits your buying power.”
 
The other changes to the mortgage rules—concerning high-end properties valued at $1 million and above, and loopholes previously exploited by unscrupulous flippers—won’t have much of an effect in Saskatchewan, Kristoff noted.
 
Late last week, another observer cautioned that the dynamism of the Canadian mortgage market itself might be at risk due to the tighter rules.
 
Addenda Capital Inc. co-chief investment officer Jean-Francois Pepin argued that contrary to the expectations of lowered home prices as a result of the new rules, mortgage origination itself might be cooled down by the regulatory changes.
 
“If it slows down the housing market, it’s going to slow down the quantity of mortgages that will end up being on banks’ books, which means there’s a smaller pool that’s available to be securitized,” Pepin said.

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