First time home buyers could be impacted by mortgage lending changes
WINNIPEG — Starting Monday Oct. 17, new mortgage rules kick in for Canadians.
New mortgage lending rules are coming out on Monday from Ottawa with a goal to tighten lending rules that will limit the amount of money Canadians can borrow. Officials say the change is in preparation for higher interest rates and higher housing prices.
This will directly impact many first time home buyers and while it may be seen as a necessity in some parts of Canada, some Winnipeg realtors don’t see the extreme necessity of the change in Winnipeg.
“Average sale price in Winnipeg is $300,000, so if that’s what you’ve been approved for before, and now with the new rules coming in your pre-approval rate will be close to 260 or 270 well that’s quite a substantial drop,” said Michael Froese with Royal LePage Prime Real Estate.
Lindsay Bonk and her partner are in the market to buy a home, but said this change could heavily impact their decision making. Initially not wanting to buy a place that requires some renovations, but rather a place ready to move in. However, with the potential for the amount lent to them changing, they worry there’s a possibility they’ll have to scale back on their hopes for their new place.
“If that’s going to affect us we will definitely have to lower our budget. Which we’re not super pumped about,” said Bonk.
The new rules will include a stress test. The test will ensure Canadians can actually afford the mortgages they’re taking on.
“A stress test is a financial calculator that we look at to say ok, what if?” said Glen Melnyk, Financial Advisor with Investors Group.
He said at the end of the day this is all in the consumers best interest. To make sure they can afford the house that they’re going in to.
“What happens if you lose your job? What happens if you get transferred? What happens if you want to sell your house? All of these things,” said Melnyk.
© 2016 Global News, a division of Corus Entertainment Inc.