Economic Update: Rule Changes in the Other Direction;
What has been considered/rumoured and looks to be the most viable is bringing back 30-year Amortization mortgages for purchasers with less than 20% down payment.
Many see it as only “fair” to help the market like first time buyers trying to get in and buy a home with the same rule who have been pushed out of the market in cities like Vancouver and Toronto. We are hearing some sort of rule change may be announced as early as this Spring.
The Stress Test also seems to have hit harder than anticipated prompting banks and builders to bang on the door of the Bank of Canada to lower the qualifying from 2% above contract rate to ideally 1%. When rates were at 2.50% a 4.50% qualifying rate made sense. When rates rose to near 4% just this last summer a 6% qualifying rate became overkill and inevitably did aid in killing a market that was already feeling taxed. We saw a slow down happen from summer last year to present and no rosy economic forecasts being posted in major market sectors.
Note that any changes in making mortgages easier to qualify for will be very large drivers in real estate activity.