Bemi Olagunju is beaming with pride about her new two-storey Saskatoon house. Olagunju moved into her Hampton Village home at the end of November.
Unfortunately, getting into the home meant Olagunju and her husband had to spend their contingency fund savings to make the purchase.
Gbemisola Olagunju is a new home owner. Mortgage changes implemented in fall 2016 made her goal of home ownership nearly unobtainable.
“We didn’t go for anything over our budget,” Olagunju said.
According to her mortgage broker Scott Tremblay, the couple was well positioned to make the purchase but mortgage rules implemented in October 2016 made the purchase cost more up front, nearly taking the Olagunju’s out of the market.
“To have a blanket rule put over everybody, it really doesn’t do most Canadians a lot of good. There’s probably a few people that would overextend themselves that this rule would help, but as a general rule most people do that planning on their own,” Tremblay said.
Currently potential homebuyers who cannot afford a down payment of 20 per cent or more are required to prove they could still afford their mortgage payments if interest rates rise two percentage points.
The procedure is called a stress test. Potential buyers who don’t pass the stress test either have to delay purchasing, or come up with additional cash. This change was implemented in October 2016.
In the Olagunjus case, they spent their $4,000 safety net to make the purchase.
As of Jan. 1, 2018, all potential homebuyers will need to pass this stress test to be approved for a mortgage.
“There’s no restrictions as to how many credit cards you can pick up. Car loan companies aren’t really monitored really at all compared to the mortgage industry,” said Tremblay, who feels the changes have slowed the housing market unnecessarily in Saskatchewan.
According to a recent report by Royal LePage, the changes coming in the new year are expected to slow the housing market even further. Nonetheless, house prices are still expected to rise about five per cent.
Homes are most people’s largest asset and while changes may take some out of the market temporarily, Tremblay encourages potential buyers to work toward it.
Olagunju’s pride of ownership says it all, “it’s worth it because at the end of the day it’s our house and when we’re finished the mortgage, only God knows what can come out of it,” she said.