Saskatoon News October 20, 2016

New mortgage rules; predictions

The new mortgage rules came into effect on Monday and some say it will have drastic consequences to the housing market. The new rules limit the borrowing power of many buyers, those with less than 20% down payment. Those without will have to qualify at a much higher rate before being approved insuring they have the ability to make payments at a higher interest rate. These rules were already in place for some types of mortgages, variable interest rate for example was one type where the stress test of a higher interest rate was applied to qualify.

Some industry officials are speculating that they will see little change to the market with these new rules as buyers typically don’t spend the full amount of what banks throw at them anyways however others are saying that there will be a drastic decline in the housing market. They are predicting that the mortgage changes will set off a full correction of the market and some are even going as far as to say to avoid buying a home in the state of the current market.

It’s predicted that these new rules will effectively eliminate first time buyers from the market and the national sales price average will decrease somewhat. Where most industry leaders agree on is the market in which will suffer the most changes. The Toronto and Vancouver condo markets will see the largest impacts of these new changes. The over inflated markets will bring a correction to these two that have been spiraling out of control.

Whether or not these changes will significantly impact our Saskatoon real estate market, only time will tell. It has never been wise to purchase at your max and I often encourage buyers against this and becoming ‘house poor’. I’m interested to see what will happen with the already flooded condo market and first time home buyers though as that’s typically where they start and enter into the market.


Kari Calder

Saskatoon real estate agent

Century 21 Fusion