{"id":3625,"date":"2016-10-11T11:11:35","date_gmt":"2016-10-11T18:11:35","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=3625"},"modified":"2016-10-07T11:36:42","modified_gmt":"2016-10-07T18:36:42","slug":"reasons-why-recent-mortgage-rule-changes-will-actually-cool-the-canadian-housing-market","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2016\/10\/reasons-why-recent-mortgage-rule-changes-will-actually-cool-the-canadian-housing-market\/","title":{"rendered":"Reasons Why Recent Mortgage Rule Changes Will Actually Cool the Canadian Housing Market"},"content":{"rendered":"<p style=\"text-align: justify;\">Will mortgage and tax rule changes that Canada\u2019s Finance Minister Minister Bill Morneau announced this week do anything to cool the Canadian housing market?<\/p>\n<p style=\"text-align: justify;\">One economic analysis firm says the measures will, so much so that it is declaring the Canadian housing market has peaked.<\/p>\n<p style=\"text-align: justify;\">\u201cUnderstandably, many are sceptical on the potential for these changes to slow housing,\u201d reads a report from Macquarie Research, noting how despite measures taken since 2008, home prices and borrowing have continued to skyrocket.<\/p>\n<p style=\"text-align: justify;\">\u201cThis time, however, is different,\u201d according to Macquarie.<\/p>\n<p style=\"text-align: justify;\">Before Morneau\u2019s announcement this week, policymakers had made numerous sets of regulatory changes over the past eight years, from tighter income verification procedures for mortgage applicants to increasing the minimum down payment on the portion of a mortgage between $500,000 and $1 million.<\/p>\n<p style=\"text-align: justify;\">But there are three reasons the most recent changes \u2014 more stringent mortgage stress testing, streamlined requirements for low- and high-ratio mortgages, and the closing of a loophole that allows foreign buyers to flip homes without paying capital gains taxes \u2014 will pack more punch than previous measures.<\/p>\n<p style=\"text-align: justify;\"><strong>1. The Canadian labour market is weaker today<\/strong><br \/>\nIt partly comes down to the strength \u2014 or lack thereof \u2014 of labour market.<br \/>\nBetween 2010 and 2012, policymakers implemented multiple sweeping macroprudential measures, but these came at a time when the labour market was more robust, Macquarie notes.<br \/>\nIn 2016, worker earnings are growing at a clipped year-over-year rate of 1 per cent, tracking below the 2010-2012 average of over 4%, for instance.<\/p>\n<p style=\"text-align: justify;\"><strong>2. Falling interest rates eased the pain previously<\/strong><br \/>\nThen there\u2019s the fact that previous tightening occurred during periods of falling interest rates.<br \/>\nMortgage rates closely follow the Government of Canada\u2019s five-year bond yield, and that it is unlikely to track lower, says the research firm.<br \/>\nThe Bank of Canada cut the overnight rate, which influences mortgage rates, by 25 basis points twice in 2015. The most recent cut in July 2015 set the rate at 0.5%. At the start of 2008, the overnight rate was 4.25 per cent.<\/p>\n<p style=\"text-align: justify;\"><strong>3. A provincial government has joined the fray<\/strong> (and another may follow)<br \/>\n\u201cOther arms of the government are eyeing measures to curb foreign investor flows,\u201d says Macquarie, noting another dynamic that wasn\u2019t part of the equation when other tightening measures were implemented.<br \/>\nOn August 2nd, the BC government enacted a 15% tax on non-residents buying residential property in Metro Vancouver. This has led at least one leading economist to suggest Toronto must do the same as foreign buyers turn their attention towards Canada\u2019s biggest market.<br \/>\n\u201cThe short answer is simply that [Ontario] doesn\u2019t have a choice because everybody else is doing it,\u201d says CIBC Deputy Chief Economist Benjamin Tal tells BNN.<br \/>\nAnd Vancouver\u2019s municipal government now looks to step up as well. Last month, Vancouver Mayor Gregor Robertson promised to begin taxing homeowners who leave their dwellings empty, rather than rent them out or live in them, next year, CBC reports.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2016\/10\/3-reasons-mortgage-rule-cool-canadian-housing-market.html\" target=\"_blank\">Reasons Why Recent Mortgage Rule Changes Will Actually Cool the Canadian Housing Market<\/a> by Josh Sherman | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Will mortgage and tax rule changes that Canada\u2019s Finance Minister Minister Bill Morneau announced this week do anything to cool the Canadian housing market? One economic analysis firm says the &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2016\/10\/reasons-why-recent-mortgage-rule-changes-will-actually-cool-the-canadian-housing-market\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-3625","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Reasons Why Recent Mortgage Rule Changes Will Actually Cool the Canadian Housing Market &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2016\/10\/reasons-why-recent-mortgage-rule-changes-will-actually-cool-the-canadian-housing-market\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Reasons Why Recent Mortgage Rule Changes Will Actually Cool the Canadian Housing Market &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Will mortgage and tax rule changes that Canada\u2019s Finance Minister Minister Bill Morneau announced this week do anything to cool the Canadian housing market? 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