The Current Status of the Canadian Housing Market
In just the past decade, real estate prices throughout Canada have skyrocketed. This is in large part due to major metropolitan areas growing and a steady influx of new home buyers from other countries. Real estate has become a very strong investment but has also become a rarer investment — very few individuals are qualified to purchase a home because of the prices. This has led to many branching out to town homes and condominiums. The new mortgage rules have made it harder for buyers to qualify, with the goal of ensuring that there isn’t a housing market crash.
The Positive Benefits of the New Mortgage Rules
- Home values are being protected. By making it more difficult to qualify for a loan, the Canadian government is making it less likely that home values will skyrocket beyond what people can truly afford. This is exactly what caused the housing market crash in the United States.
- There will be fewer offers. In highly desirable areas such as Toronto, each home on the market may have dozens or even hundreds of offers. With fewer buyers qualified, there will be fewer offers — and lessened competition will put a dampen on the skyrocketing prices.
- Rates will be able to stay low. Interest rates for mortgages tend to go up when higher risk mortgages are being issued. With these low risk mortgages becoming commonplace, interest rates will stay lower for qualified buyers.
The Ultimate Consequences of the New Mortgage Rules
There are some buyers that may now find that they are no longer qualified to get a mortgage. But these buyers can resolve the situation by simply improving their credit ratings. Other than this, some buyers may want to look at smaller, more affordable homes, town homes, and condominiums. Either way, however, this will have a stabilizing effect on the economy as a whole. Buyers who do qualify will want to make a purchase now, before the effects are fully felt.
Though many Canadian home buyers have been hesitant regarding the new mortgage rules, they actually make the market far better for qualified buyers. Those who have good credit scores, solid incomes, and are looking for appropriate homes will likely be able to easily find a property that they desire — and will face less competition.