New mortgage rules could make buying homes in Atlantic Canada harder
The federal government’s new mortgage rules for lending may have a negative impact on the Atlantic Canada market, according to real estate experts.
“The thing is, when you qualify for a mortgage at the rates they’re prescribing, it drops your borrowing power by about 20-25 per cent,” said Janet McKeough, director of the Canadian Mortgage Brokers Association.
New mortgage lending rules announced Monday are aimed at tightening lending rules, limiting the amount of money Canadians can borrow. Officials say the change is a preparation for higher interest rates and higher housing prices.
McKeough says she understands Ottawa’s move to ultimately protect buyers, but says it’s not the right move for smaller markets like Halifax, where the cost of living is similar that in bigger cities.
“The average two-bedroom apartment costs $1,300 [per month] here — that’s similar to Toronto or Vancouver. So our cost of living is that of what’s in other markets but our income is not the same, our income is substantially less so it’s going to delay first-time home buyers getting into the market,” McKeough said.
Real estate agent James Dwyer says the rule change will also impact whether people will stay in the region.
“When young people purchase their first home, it really solidifies their position to stay in the community because now they have something to hold them here. So when they get that job transfer that’s being offered to them in Toronto or Vancouver, they’re less likely to leave.”
The new lending rules will also impact people selling their homes, according to Dwyer.
“If 200 homes come on the market this spring that are traditionally in that $250,000 range, that buying pool has just shrunk because people can no longer qualify for that. So it may have an impact long term on the prices of listings.”
McKeough thinks the Federal government should revise their plan and consider making adjustments for different price points.
“I think the recommendations that Ottawa is implementing now should be used for homes that are $500,000 or more and then they could have a status-quo for homes purchased under that,” she said.
– With Files form Zahra Premji, Global News
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