{"id":9916,"date":"2018-07-26T10:10:52","date_gmt":"2018-07-26T17:10:52","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9916"},"modified":"2018-07-26T07:50:47","modified_gmt":"2018-07-26T14:50:47","slug":"18-of-prospective-homebuyers-were-unable-to-buy-their-preferred-home","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/07\/18-of-prospective-homebuyers-were-unable-to-buy-their-preferred-home\/","title":{"rendered":"18% of Prospective Homebuyers were Unable to Buy Their Preferred Home"},"content":{"rendered":"<p style=\"text-align: justify;\">Instead of safeguarding Canada\u2019s financial system, one association says the mortgage stress test is unduly suppressing housing activity, which could spell future trouble for the economy.<\/p>\n<p style=\"text-align: justify;\">Since the new mortgage stress test was implemented on January 1, roughly 18% of prospective homebuyers were unable to buy their preferred home, according to a new report from Mortgage Professionals Canada (MPC), published Wednesday.<\/p>\n<p style=\"text-align: justify;\">\u201cI think there\u2019s no question that there\u2019s a significant number of folks who have been disqualified from purchasing a home,\u201d Paul Taylor, president and CEO of Mortgage Professionals Canada tells Livabl.<\/p>\n<p style=\"text-align: justify;\">\u201cThe stress test effectively reduces everybody\u2019s borrowing ability. It also stifled an awful lot of what would be sort of move-up buyers,\u201d he adds.<\/p>\n<p style=\"text-align: justify;\">The semi-annual report uses consumer surveys to provide insight on the housing and mortgage market in Canada.<\/p>\n<p style=\"text-align: justify;\">The stress test was implemented by the Office of the Superintendent for Financial Institutions (OSFI) and requires all uninsured mortgage borrowers to qualify against the Bank of Canada\u2019s five-year benchmark rate, or at their contract rate plus an additional two per cent. This policy follows a similar stress test introduced in 2016 for insured mortgages.<\/p>\n<p style=\"text-align: justify;\">Since January, home sales have fallen across Canada, as consumers wait on the sidelines to see the impact of the stress test and increasing interest rates.<\/p>\n<p style=\"text-align: justify;\">However, if home sales continue to slow, MPC\u2019s Taylor notes that prices will start to erode and this could cause homeowners to pullback on consumer spending. This could precipitate a dangerous scenario for the overall economy.<\/p>\n<p style=\"text-align: justify;\">\u201cWhen [their home] starts to be worth less people start to be concerned about their economic future. They stop spending, they start saving more, they don\u2019t go out on the weekends. And so that has economic knock on consequences for local restaurants and other service providers,\u201d Taylor says.<\/p>\n<p style=\"text-align: justify;\">In addition, he adds that a slowdown in sales could be seen as a breather in overheated metros like Toronto and Vancouver, but easing sales is not a welcome change across the country .<\/p>\n<p style=\"text-align: justify;\">\u201cIn some other areas of the country where the economy is not already firing on all cylinders \u2014Alberta and some of the Atlantic provinces \u2014 these policies can actually have quite a dampening economic impact,\u201d says Taylor.<\/p>\n<p style=\"text-align: justify;\">MPC do not oppose the stress test, but conclude that the current rate could be reduced to three quarters of a per cent while still being effective.<\/p>\n<p style=\"text-align: justify;\">\u201cWe just think that that two per cent rate at the moment is too high. It doesn\u2019t take into account expected increases in people\u2019s incomes over time. It doesn\u2019t seem to take into account the fact that five years in you\u2019ll have down paid quite a lot of equity in your home and so your debt outstanding is actually going to be reduced,\u201d says Taylor.<\/p>\n<p><a href=\"https:\/\/www.livabl.com\/2018\/07\/stress-test-prevented-18-homebuyers-purchasing-home.html\" target=\"_blank\" rel=\"noopener\">Mortgage Stress Test Has Prevented 18% of Canadian Homebuyers from Purchasing the Home They Want<\/a> by Kerrisa Wilson | Livabl<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Instead of safeguarding Canada\u2019s financial system, one association says the mortgage stress test is unduly suppressing housing activity, which could spell future trouble for the economy. Since the new mortgage &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/07\/18-of-prospective-homebuyers-were-unable-to-buy-their-preferred-home\/\">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-9916","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>18% of Prospective Homebuyers were Unable to Buy Their Preferred Home &#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\/2018\/07\/18-of-prospective-homebuyers-were-unable-to-buy-their-preferred-home\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"18% of Prospective Homebuyers were Unable to Buy Their Preferred Home &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Instead of safeguarding Canada\u2019s financial system, one association says the mortgage stress test is unduly suppressing housing activity, which could spell future trouble for the economy. 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