{"id":903,"date":"2016-02-11T09:44:31","date_gmt":"2016-02-11T17:44:31","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=903"},"modified":"2016-02-11T09:44:41","modified_gmt":"2016-02-11T17:44:41","slug":"new-mortgage-rules-higher-rates-to-push-canadian-home-sales-lower-in-2016","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2016\/02\/new-mortgage-rules-higher-rates-to-push-canadian-home-sales-lower-in-2016\/","title":{"rendered":"New Mortgage Rules &#038; Higher Rates to Push Canadian Home Sales Lower in 2016"},"content":{"rendered":"<p style=\"text-align: justify;\">New lending rules set to take effect next week coupled with mortgage rates that are creeping higher are expected to slow Canadian home sales in 2016, according to TD Economics.<\/p>\n<p style=\"text-align: justify;\">The bank\u2019s economic research arm is now forecasting existing home sales to amount to 488,600 units by the end of 2016, a 3.1% drop from last year. In 2015 transactions numbered about 504,200, a 5.1% increase compared to 2014.<\/p>\n<p style=\"text-align: justify;\">Despite the Bank of Canada\u2019s near historically low target for the key interest rate, TD notes that some banks have hiked the five-year special mortgage rate by as much as 30 basis points from December to January.<\/p>\n<p style=\"text-align: justify;\">\u201cHistory suggests that a 30 basis point rate increase translates into a 5% to 10% decline in existing home sales over a period of two quarters,\u201d TD said, adding activity would still remain above \u201clong-run averages.\u201d<\/p>\n<p style=\"text-align: justify;\">The key interest rate influences mortgage rates, but despite the Bank of Canada keeping it at a historically low level, rising operating costs for banks are pushing rates they offer to consumers higher.<\/p>\n<p style=\"text-align: justify;\">In July this year, the Canada Mortgage and Housing Corporation is set to start charging higher rates to financial institutions for the loans it insures.<\/p>\n<p style=\"text-align: justify;\">Meanwhile, down payments will be getting more expensive for some homebuyers as another rule the federal Liberal government put forward in December takes effect February 15th, further cool activity. For government insured mortgages, the minimum down payment is rising to to 10% from 5%, but only on the portion of the loan between $500,000 and $1 million.<\/p>\n<p style=\"text-align: justify;\">\u201cThis marks the fifth time in almost seven years the government has tightened qualifying rules for insured mortgages,\u201d TD Economics noted in the report.<\/p>\n<p style=\"text-align: justify;\">\u201cFollowing each of the past four rule changes, housing demand slumped for about four to six quarters,\u201d the bank continued.<\/p>\n<p style=\"text-align: justify;\">TD Economics have noted this rule change won\u2019t have an impact of that scale, it will still downwardly affect sales, particularly in Toronto and Vancouver, where average home prices are well above $500,000.<\/p>\n<p style=\"text-align: justify;\">\u201cThe lofty activity last year has likely left these two markets more vulnerable to even a gradual increase in interest rates and regulatory rule changes,\u201d the bank explained.<\/p>\n<p style=\"text-align: justify;\">TD Economics expects 93,400 existing homes to change hands in Toronto this year, an 8.3% drop from 2015. During this period, TD predicts Vancouver activity to fall to 39,800 units, a 7.8% year-over-year decline.<\/p>\n<p style=\"text-align: justify;\">Activity in these cities influences national housing market numbers more so than other local markets because they typically have higher sales volumes.<\/p>\n<p style=\"text-align: justify;\">\u201cThe new [mortgage rule] changes may also disproportionately impact Calgary, a market that has a higher proportion of first-time homebuyers than most,\u201d TD added.<\/p>\n<p><a href=\"http:\/\/news.buzzbuzzhome.com\/2016\/02\/mortgage-rules-higher-rates-canadian-home-sales.html\" target=\"_blank\">New Mortgage Rules &amp; Higher Rates to Push Canadian Home Sales Lower in 2016<\/a> by Josh Sherman | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"<p>New lending rules set to take effect next week coupled with mortgage rates that are creeping higher are expected to slow Canadian home sales in 2016, according to TD Economics. &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2016\/02\/new-mortgage-rules-higher-rates-to-push-canadian-home-sales-lower-in-2016\/\">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-903","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>New Mortgage Rules &amp; Higher Rates to Push Canadian Home Sales Lower in 2016 &#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\/02\/new-mortgage-rules-higher-rates-to-push-canadian-home-sales-lower-in-2016\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"New Mortgage Rules &amp; 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