Canada’s finance minister believes the housing market remains hot, but healthy. It just needs a little more regulatory care to keep it that way and not harm the economy in the process.
For now, Bill Morneau’s prescription calls for some gentle adjusting of existing rules — like closing a tax loophole on non-resident real estate investors — along with new measures, such as a mortgage-rate “stress test” to ensure hopeful buyers can afford to get into the market in the first place and meet their payments when lending levels begin to rise.
Phil Soper, chief executive at Royal LePage, said “we are already starting to see the early stages of a cyclical slowing of the market in both cities — albeit more pronounced in Vancouver.”
“For the rest of the country, I believe we’re actually in a natural expansionary phase and will probably see very little change or slowing … anywhere but in our two biggest cities,” he said.
Overall, these measures should serve to ensure today’s first time home buyer can sustain a rate increase, should rates rise, when their mortgages come in for renewal, three, four or five years from now.
Some first time home buyers may find themselves having to adjust their purchase price, or adjust the location in which they intended on buying in, however, these changes do not and should not deter any first time home buyer from realizing their dream of home ownership. And while it may seem unfair, these changes will help ensure that today’s buyers are fundamentally sound for years to come.