In toronto real estate, new regulations aimed at inducing it harder to get a mortgage take effect today, October 17, 2016, a move that is bound to have an impact on demand for homes in Canada.
Earlier this month, Ottawa announced the moves, which boil down to a stress exam for all insured mortgage applications.
It consists of testing to determine if a borrower could render to pay back a loan if the rate goes higher, so they judge the borrower against the five-year standard rate of 4. 64 per cent for a five-year loan — even though many lenders are currently offering mortgages at far less than that.
Previously, that exam was only used on certain segments of the market. But starting now, it will be in place for any insured mortgage for a buyer putting down less than 20 per cent of the home up front.
The new mortgage regulations aim in an attempt to rein in debt loadings, which is likely to cool prices, too. By inducing it harder to get a mortgage, demand for housing faces restriction, which should make prices to fell or at least not increase as quickly.
Mortgage brokers reported a flurry of borrowing last week as homebuyers tried to get in under the wire.
Toronto-based broker says he guesses the new regulations will have a big impact on certain segments of the market, especially first-time buyers with small down payment.” I think that we will see first-time home buyers begin to get frustrated after the relevant rules to come down ,” he said in an interview.” It’s a somewhat significant hit to how much people can render — you’re looking at 20 to 30 per cent reduction in the mortgage value that people take on .”
