Tougher mortgage stress testing rules are pushing some Canadian homebuyers to lower their expectations for a new home and others to opt out of buying altogether.<\/p>\n
In a sign of the ongoing role government intervention is playing in the market, one in three Canadian homebuyers said they had decided to forego a home purchase in light of the new mortgage qualification rules that came into effect January 1, according to a new Re\/Max survey conducted by Leger.<\/p>\n
A quarter of buyers compromised on the size of their home, while 18 per cent made concessions on its location.<\/p>\n
\u201cIt has definitely cut out the buying power of first time home buyers and prompted other consumers to rethink where and what they\u2019re going to buy,\u201d said Christopher Alexander, executive vice-president and regional director for Re\/Max. \u201cIf you could afford a house at a certain price point and that became unattainable in the last 18 months, you\u2019re probably looking at a condo. If you still want a house maybe you have to consider a different area.\u201d<\/p>\n
The new mortgage lending rules introduced by the Office of Superintendent of Financial Institutions (OSFI) require home buyers to prove that they can service their uninsured mortgage at the contractual rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada.<\/p>\n
They came on the heels of market-cooling measures \u2014 including a foreign buyers tax \u2014 unveiled by the Ontario government in April 2017.<\/p>\n
Following these moves, sales volumes in the Toronto region slowed through the summer and fall and plummeted in the opening months of 2017 \u2013 particularly in comparison to the same period a year ago, when prices soared and bidding wars were commonplace.<\/p>\n
The average residential sales price in the Greater Toronto Area was $753,747 in January and February, down 10 per cent from $834,144 a year earlier, according to the Re\/Max Spring market trends report.<\/p>\n