Toronto – Oct 23, 2017 – The new rules being introduced will require home buyers with a 20 per cent downpayment to show that they can meet their mortgage commitment if the mortgage interest rates rise above the published five-year benchmark rate by Bank of Canada or 2 per cent higher than the current rate on their mortgage.
The home buyers with a 20 per cent downpayment are not required to go through the stress test at this time. The original rule introduced last year only required home buyers with an insured mortgage to undergo mortgage stress test. Many home buyers in Toronto and Vancouver got gifts from parents or other sources to quality for uninsured loans.
The Ontario Real Estate Association (OREA) in a statement called the OSFI changes “overkill” that “will hurt middle class families and punish careful savers most.”
“It’s time for governments to hit the brakes on more demand side policy interventions and take a wait and see approach,” said OREA.
The rise in the Toronto area home prices have slowed down drastically since the peak of the market in April of this year with a 33 per cent year-over-year increase. The September numbers reported by Toronto Real Estate Board showed a much less 2.6 per cent monthly year-over-year increase.
At some point, all this Government intervention will have the undesired effect of hurting the overall housing market, not just Toronto and Vancouver, and drag down Canadian economic growth.