Market News

Here’s how much house you’ll be able to buy with the new mortgage stress test

Canada’s banking regulator introduced new rules on Tuesday that extend the requirement for a mortgage stress test to all homebuyers, including those with larger down payments. Currently, the stress test applies only to mortgages with lower down payments and those with a term of less than five years.

Today, the Office of the Superintendent of Financial Institutions (OSFI) introduced a new minimum qualifying rate – a.k.a “stress test” – even for uninsured mortgages, which have down payments of 20 per cent or more.

The guidelines will take effect Jan. 1, 2018 and apply to new mortgages as well as mortgage renewal applications if borrowers switch lenders. Financial institutions won’t be obligated to apply the test at mortgage renewal for existing borrowers, although they may choose to do so, OSFI told Global News.

The new guidelines now require federally regulated financial institutions to vet applicants for uninsured mortgages by using a minimum qualifying rate equal to the greater of the Bank of Canada’s five-year benchmark rate (currently 4.89 per cent) or their contractual rate plus 2 percentage points.

What this means for your mortgage

Here’s how the rules would play out for a family with $100,000 in annual income, according to numbers provided by Ratehub.ca, a mortgage rates and credit cards comparisons site.

Let’s consider a first scenario in which the family is offered a mortgage rate of 2.83 per cent, which is more than two percentage points below the current Bank of Canada five-year benchmark of 4.89 per cent.

If they were to apply for a mortgage today, with 20 per cent down payment, a five-year fixed mortgage, and a 25-year amortization period, they would be able to afford a home worth $726,939.

If they were to apply for a mortgage on or after Jan. 1, they would be able to afford only $570,970, with a 20 per cent down payment.

Information kindly provided by Global News.

More supply and less demand seen across Metro Vancouver housing market

The supply of homes for sale continued to increase across the Metro Vancouver* housing market in September while home buyer demand remained below typical levels for this time of year.

Commercial real estate sales down, prices up in the Lower Mainland

The commercial real estate market in the Lower Mainland continued to see fewer transactions in the second quarter (Q2) of 2018 compared to recent years.

There were 569 commercial real estate sales in the Lower Mainland in Q2 2018, a 16.3 per cent decrease over the 680 sales in Q2 2017, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

Home buyer demand stays below historical averages in August

The Metro Vancouver(1) housing market continues to experience reduced demand across all housing types.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,929 in August 2018, a 36.6 per cent decrease from the 3,043 sales recorded in August 2017, and a 6.8 per cent decline compared to July 2018 when 2,070 homes sold.

Last month’s sales were 25.2 per cent below the 10-year August sales average.

Housing supply up, demand down across Metro Vancouver

July’s residential housing sales in Metro Vancouver* reached their lowest levels for that month since the year 2000.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,070 in July 2018, a 30.1 per cent decrease from the 2,960 sales recorded in July 2017, and a decrease of 14.6 per cent compared to June 2018 when 2,425 homes sold.

Home seller supply grows as demand declines

With home sale activity dipping below long-term historical averages, the supply of homes for sale in Metro Vancouver* reached a three-year high in June.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,425 in June 2018, a 37.7 per cent decline from the 3,893 sales recorded in June 2017, and a 14.4 per cent decrease compared to May 2018 when 2,833 homes sold.

Last month’s sales were 28.7 per cent below the 10-year June sales average.

Source: https://www.rebgv.org/news-statistics