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More stringent mortgage qualification rules "unduly suppress" home sales in Canada by disqualifying 18% of homebuyers who can not pbad the tension test despite the fact that they can afford to pay for their home favorite, concludes a new report. Professionals Canada, representing mortgage brokers and others working in the mortgage industry, estimates that about 100,000 Canadians have been prevented from buying their favorite home since the end of 2016, because of the new federal mortgage rules to ensure that buyers can still pay their mortgages. The estimate of 100,000 includes 60,000 to 70,000 buyers who could not buy because of the stress test applied to mortgages insured as of October 2016, as well as 20,000 to 30,000. 000 other affected. by the more recent stress test applied to uninsured mortgages on January 1 of this year.
History continues below advertisement [19659005] Housing economist Will Dunning, author of the report, estimates that 40 to 50% of all homebuyers in the first half of this year – about 140,000 to 175 000 buyers – have been subjected to the new uninsured mortgage stress test. From 15 to 18 percent of them failed this test.
Most of these buyers still bought, but had to buy a cheaper home. Mr. Dunning's report concluded that the average price adjustment required was $ 28,750.
He expects approximately 120,000 purchasers per year to make an adjustment because of the stress test. mortgage and that 30,000 to 40,000 more important effects and must delay their plans to purchase for an "extended period" in order to save more for a down payment.
"Compared to other mortgage policy changes that have been made over the past decade, He tests the two new stress tests as the main cause of the 12.5% decline in home sales in Canada during the first half of 2018 on an annualized basis compared to last year. the first half of 2017, and the drop of 16.5% this year compared to the same period in 2016.
While many economists predict sales will pick up in the second half of 2018 because people s & # 39 will adapt to policy changes, Dunning disagrees, saying t According to a survey of consumers by Mortgage Professionals Canada, 54 percent of people who are not homeowners but who plan to buy in the next five years s & # Expect the stress test to have "significant negative repercussions". "On their ability to buy, while 35% think the impact would be moderate and only 11% think that the impact would be negligible.
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Homeownership In Canada, the rate fell from 69% in 2011 to 67.8% in 2016, and Mr. Dunning expects it to continue to decrease due to the difficulties imposed by the resistance test rules
will add to the "financial stresses" already experienced by younger generations in relation to the baby boom generation.
Report, the economic weakness in Alberta, Saskatchewan and Newfoundland has been "worsened." by the stress tests, which caused an even lower real estate activity than it should be. "
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