Canada: New mortgage rules could hit 50,000 home buyers per year

A report by Mortgage Professionals Canada has forecast that 40,000 to 50,000 Canadians a year could find it “impossible” to afford to buy a house due to tougher mortgage stress test regulations implemented on January 1st.

The new rules require borrowers making a down payment of less than 20% to undergo a stress test to determine if they could still afford their mortgage if interest rates were raised. It is estimated in the report that up to 100,000 potential buyers would not meet the new guidelines.

"The tightening of stress testing requirements is estimated to result in a 6-7.5% decline in home sales and reduce the pace of new mortgage lending growth."

The tightening of stress testing requirements is estimated to result in a 6-7.5% decline in home sales and reduce the pace of new mortgage lending growth. According to RFi Group data, currently 28% of retail banking customers hold a mortgage on their main residence.

Therefore, with the estimated figures, the rule changes could result in a lack of growth from this current figure. However, the report also noted that between 50 to 60% of those not qualifying under the new rules would still potentially be able to purchase a cheaper home.

 

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