{"id":7725,"date":"2017-12-28T10:10:58","date_gmt":"2017-12-28T18:10:58","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=7725"},"modified":"2017-12-13T11:04:37","modified_gmt":"2017-12-13T19:04:37","slug":"changes-to-the-housing-market-regulations-rising-interest-rates-are-setting-up-for-a-moderation-in-real-estate-resales","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2017\/12\/changes-to-the-housing-market-regulations-rising-interest-rates-are-setting-up-for-a-moderation-in-real-estate-resales\/","title":{"rendered":"Changes to the Housing Market Regulations &#038; Rising Interest Rates are Setting-Up for A Moderation in Real Estate Resales"},"content":{"rendered":"<p style=\"text-align: justify;\">It\u2019s been a booming year for the Canadian economy, with annual GDP growth forecast to be 2.9%. That\u2019s in no small part thanks to a red hot housing market \u2014 but now that things have cooled slightly, what will the economy look like in 2018?<\/p>\n<p style=\"text-align: justify;\">\u201cThe drivers of Canada\u2019s economy are set to shift in 2018,\u201d RBC\u2019s economics team writes in its quarterly economic and financial market outlook. \u201cAfter several years of housing activity acting as the main engine of growth, changes to regulations in the housing market and rising interest rates are setting up for a moderation in housing resales.\u201d<\/p>\n<p style=\"text-align: justify;\">The team is referring to new federal mortgage rules announced earlier this fall. Starting January 1, a new stress test will require all uninsured mortgage borrowers to qualify against the Bank of Canada\u2019s five-year benchmark rate, or at their contract mortgage rate plus an additional 2%.<\/p>\n<p style=\"text-align: justify;\">The test is intended to ensure that uninsured borrowers can withstand higher interest rates. The overnight rate \u2014 which influences mortgage rates and sat at a historically low 0.5% earlier this year \u2014 has been raised 50 basis points since July, with further hikes predicted in 2018.<\/p>\n<p style=\"text-align: justify;\">The combination of the new rules and higher interest rates is likely to cool the resale market for much of 2018.<\/p>\n<p style=\"text-align: justify;\">\u201cWe expect rising interest rates will drive the next phase of the [market] correction in 2018 as higher rates add to strained affordability in major markets that ultimately tamps down on homebuyer demand,\u201d reads the report.<\/p>\n<p style=\"text-align: justify;\">So what does this all mean for the economy in 2018? A cooling \u2014 but not a drastic one.<\/p>\n<p style=\"text-align: justify;\">\u201cWe expect the economy to gear down in 2018 although still grow faster than the economy\u2019s potential growth rate,\u201d writes the team. \u201cIn 2018, as the impact of higher interest rates take effect, the economy is forecast to slow to 1.6%.\u201d<\/p>\n<p style=\"text-align: justify;\">It\u2019s a prediction that has been echoed by other economists. TD\u2019s economics team predicted earlier this fall that GDP growth would slow to 2% in 2018 as a result of a cooling housing market.<\/p>\n<p style=\"text-align: justify;\">According to TD senior economist Brian DePratto, Ontario could see the biggest impact.<\/p>\n<p style=\"text-align: justify;\">\u201cIf we do see a little more weakness [in Ontario], given we had all that strength coming out of the consumption from housing wealth, that sort of takes away one of the big drivers for the economy,\u201d he told BuzzBuzzNews.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2017\/12\/housing-market-boosting-canadas-economy-all-year-but-it-wont-for-longer-rbc.html\" target=\"_blank\" rel=\"noopener\">RBC : The Housing Market Has Been Boosting Canada&#8217;s Economy All Year, but It Won&#8217;t for Much Longer<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It\u2019s been a booming year for the Canadian economy, with annual GDP growth forecast to be 2.9%. That\u2019s in no small part thanks to a red hot housing market \u2014 &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2017\/12\/changes-to-the-housing-market-regulations-rising-interest-rates-are-setting-up-for-a-moderation-in-real-estate-resales\/\">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":[8],"tags":[],"class_list":["post-7725","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Changes to the Housing Market Regulations &amp; Rising Interest Rates are Setting-Up for A Moderation in Real Estate Resales &#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\/2017\/12\/changes-to-the-housing-market-regulations-rising-interest-rates-are-setting-up-for-a-moderation-in-real-estate-resales\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Changes to the Housing Market Regulations &amp; Rising Interest Rates are Setting-Up for A Moderation in Real Estate Resales &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"It\u2019s been a booming year for the Canadian economy, with annual GDP growth forecast to be 2.9%. 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