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.

Steady increases in home sale and listing activity continue in June

Home buyers and sellers have gradually become more active in each month of the COVID-19 pandemic. In June, home sale and listing activity in Metro Vancouver* returned to more historically typical levels.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,443 in June 2020, a 17.6 per cent increase from the 2,077 sales recorded in June 2019, and a 64.5 per cent increase from the 1,485 homes sold in May 2020.

Last month’s sales were 21.9 per cent below the 10-year June sales average.

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Home prices remain steady, buyers and sellers become more comfortable operating in today’s market

Metro Vancouver* home prices have remained steady since provincial health officials implemented physical distancing requirements in March.

The Real Estate Board of Greater Vancouver (REBGV) reports that the MLS® Home Price Index1 composite benchmark price for all residential properties in Metro Vancouver today is $1,028,400. This is virtually unchanged from April 2020, a 1.4 per cent increase over the last three months, and a 2.9 per cent increase compared to May 2019.

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Home sales and listings down amid COVID-19, new tools and practices emerge to help buyers and sellers adapt

While Metro Vancouver* home sale and listing activity remains limited by the COVID-19 situation, REALTORS® across the region are fast adopting new tools and practices to help advise and serve their clients in a responsible way.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,109 in April 2020, a 39.4 per cent decrease from the 1,829 sales recorded in April 2019, and a 56.1 per cent decrease from the 2,524 homes sold in March 2020.

Last month’s sales were 62.7 per cent below the 10-year April sales average and was the lowest total for the month since 1982.

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Home buyers and sellers adjust their activities in March amid challenging circumstances

Metro Vancouver’s* housing market saw steady home buyer demand to begin March and a levelling off of activity as the month went on and concerns about the COVID-19 outbreak intensified. 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,524 in March 2020, a 46.1 per cent increase from the 1,727 sales recorded in March 2019, and a 17.4 per cent increase from the 2,150 homes sold in February 2020. 

Last month’s sales were 19.9 per cent below the 10-year March sales average. 

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Steady demand and low supply benefits home sellers

February saw steady home buyer demand and reduced home seller supply across Metro Vancouver*.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,150 in February 2020, a 44.9 per cent increase from the 1,484 sales recorded in February 2019, and a 36.9 per cent increase from the 1,571 homes sold in January 2020.

Last month’s sales were 15.6 per cent below the 10-year February sales average.

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Home sale activity up, supply down to start 2020

Home sale and price activity remained steady in Metro Vancouver* to start 2020 while home listing activity declined in January.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,571 in January 2020, a 42.4 per cent increase from the 1,103 sales recorded in January 2019, and a 22.1 per cent decrease from the 2,016 homes sold in December 2019.

Last month’s sales were 7.3 per cent below the 10-year January sales average.

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Home sales decline below long-term averages in 2019 despite increased demand to end the year

The Metro Vancouver* housing market experienced below average sales activity and moderate price declines in 2019.

The Real Estate Board of Greater Vancouver (REBGV) reports that sales of detached, attached and apartment homes reached 25,351 in 2019, a three per cent increase from the 24,619 sales recorded in 2018, and a 29.6 per cent decrease over the 35,993 residential sales in 2017.

Last year’s sales total was 20.3 per cent below the region’s 10-year sales average.

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Metro Vancouver home sales return to historically typical levels

After a quieter first half of 2019, home buyer activity has returned to more historically typical levels in Metro Vancouver*.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,498 in November 2019, a 55.3 per cent increase from the 1,608 sales recorded in November 2018, and a 12.6 per cent decline from the 2,858 homes sold in October 2019.

Last month’s sales were four per cent above the 10-year November sales average.

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Home buyer activity increases in October

The Metro Vancouver housing market is experiencing a fall pickup in home sale activity.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,858 in October 2019, a 45.4 per cent increase from the 1,966 sales recorded in October 2018, and a 22.5 per cent increase from the 2,333 homes sold in September 2019.

Last month’s sales were 9.8 per cent above the 10-year October sales average.

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Increased demand helps housing market reach balanced territory

Home buyer demand has returned to more historically typical levels in Metro Vancouver* over the last three months.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,333 in September 2019, a 46.3 per cent increase from the 1,595 sales recorded in September 2018, and a 4.6 per cent increase from the 2,231 homes sold in August 2019.

Last month’s sales were 1.7 per cent below the 10-year September sales average.

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Source: https://www.rebgv.org/market-watch/monthly-market-report/