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.”

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