Real Estate

New improved mortgage regulations coming?

  • Last Updated:
  • Mar 17th, 2019 8:57 pm
Banned
Jun 1, 2017
513 posts
469 upvotes
JayLove06 wrote: The people who are complaining I doubt contribute much to their RRSPs if at all.

30% drop is OK for you. Not OK for most people. The problem here is people look at their own situation and determine what is acceptable. Should not work that way.

If the government can meddle with the market and drop prices 30% then thry can boost them 60%. Is this really what we want? Real estate being treated like stock? Government playing with the market to buy votes?

We need an accurate count of vacant dwellings vs housing that is required vs immigration and from there determine how under or overbuilt we are. If we are underbuilt the government can play around all they want, there will be upward pressure on prices if demand exceeds supply. Continue to ignore factors that contribute to crazy price growth and we will remain in the same situation. Continue to ignore public transit, prices will keep increasing. Charge builders ridiculous development fees, don’t incentivize builders to build affordable rental homes, keep rent control, prices will go up. You can’t tax your way to solutions. Our government will have to do some actual hard work and make some unpopular decisions.

I want homes to be more affordable but not by the government artificially dropping prices.
Yes. Government did too much. Especially idiot Wynne did that for election.
Deal Addict
Jan 15, 2017
3526 posts
2882 upvotes
JayLove06 wrote: It is still an incomplete calculator IMO. Rates are going to rise 2% overnight? But then ignore that the mortgage is getting paid down over that term. Ignore inflation and ignore salary increase over that 5 year span as well.

It’s a basic calculator when it needs a more practical and robust algorithm IMO. It’s a silly hard line that ignores a lot of factors. But this is what the banks want, which is fine but thry shouldn’t cry about loss of business. The stress test makes home ownership less affordable than before. Then again, banks don’t care about affordability. Rules and regulations aren’t going to make things better. The government will have to get off their asses and incentivize builders to BUILD affordable housing. And sadly “affordable” probably goes over the average persons budget.
I am not a fan of the stress test, as we still have a really low rate of mortgage default. And I agree with you that the stress test ignores a lot of factors.

The banks didn't want it though - gov't did. Gov't had to do something to reign in the burgeoning consumer debt in this country and the risk that it continues to pose to tax payers. A sudden housing market correction could leave CMHC or any of the big banks exposed to large mortgage losses that would have to be covered by tax payers. Not a good play, considering that less than 30% of consumers have mortgages. Imaging having the other 70% of consumers have to pay via special tax levies or higher taxes because mortgage holders started defaulting on their mortgages. Imagine all the Cdns who decided that home ownership was too risky or too expensive for them and decided to rent and now being asked to pay for those Cdns that didn't have enough sense to recognize the risk that they were taking on with their large mortgages? Or how about all those Cdns who worked and paid off their mortgages on their homes now being required to pay through higher taxes cause Mr. Neighbour defaulted on his mortgage?

The stress test was genius actually. It effectively raised interest rates in the most debt laden industry without actually raising interest rates for every other industry.
Sr. Member
Nov 10, 2017
759 posts
518 upvotes
Credit Union loves stress test. People just simply go there in the end, no problem getting mortgage.
Deal Guru
Feb 29, 2008
12594 posts
7827 upvotes
skeet50 wrote: I am not a fan of the stress test, as we still have a really low rate of mortgage default. And I agree with you that the stress test ignores a lot of factors.

The banks didn't want it though - gov't did. Gov't had to do something to reign in the burgeoning consumer debt in this country and the risk that it continues to pose to tax payers. A sudden housing market correction could leave CMHC or any of the big banks exposed to large mortgage losses that would have to be covered by tax payers. Not a good play, considering that less than 30% of consumers have mortgages. Imaging having the other 70% of consumers have to pay via special tax levies or higher taxes because mortgage holders started defaulting on their mortgages. Imagine all the Cdns who decided that home ownership was too risky or too expensive for them and decided to rent and now being asked to pay for those Cdns that didn't have enough sense to recognize the risk that they were taking on with their large mortgages? Or how about all those Cdns who worked and paid off their mortgages on their homes now being required to pay through higher taxes cause Mr. Neighbour defaulted on his mortgage?

The stress test was genius actually. It effectively raised interest rates in the most debt laden industry without actually raising interest rates for every other industry.
Wouldn't you say banks influenced that change though? I mean, government had their say too, but banks wanted this extra protection.
Deal Addict
Jan 15, 2017
3526 posts
2882 upvotes
JayLove06 wrote: Wouldn't you say banks influenced that change though? I mean, government had their say too, but banks wanted this extra protection.
Hard to say. If banks wanted to lower their mortgage balance and its accompanying risk, all they need to do is tighten their lending requirements. Banks have enough data to know for instance that simply changing any of the core credit requirements would affect their funding levels.

Challenge right now is that Canadians are still at an all time high in regards to personal debt. Over $1.4 trillion in mortgages and HELOCs alone.
Deal Addict
Jan 12, 2017
1100 posts
519 upvotes
Ironically enough, the best (possibly only) way to make housing affordable is probably by forcing the construction of high density social housing around the areas they'd like to bring prices down.
DaMan12 wrote: I don't see how any of this improves "affordability" if all it does is increase how much debt buyers can take on.

Condo prices in TO are basically up 20% since they "peak" in Spring of 2017. If the Liberals really cared they would do something to try and drop condo prices.
Deal Addict
Mar 27, 2004
4625 posts
2271 upvotes
Toronto
Prices are going up.
Full-time Realtor
Jr. Member
Nov 5, 2017
166 posts
144 upvotes
The point is real estate is high and most of the buyer are priced out, except few who are climbing property ladder. All these measure will boot prices, young milliniels vote is the target. Stress test is helping the market but hurting real estate cartel, guess who's is going to win?
Banned
Jun 1, 2017
513 posts
469 upvotes
Smart123 wrote: The point is real estate is high and most of the buyer are priced out, except few who are climbing property ladder. All these measure will boot prices, young milliniels vote is the target. Stress test is helping the market but hurting real estate cartel, guess who's is going to win?
Only those who are not working are priced out. There are still lots of cheap properties e.g.apartments, condo. If they can afford apartments condos but only want to buy detached, that’s their problem.
Just like those don’t have high skills and good education but only want to get high pay job, they cannot complain there are no job for them. They cannot expect idiot wynne screw those high skilled professionals and assign the high pay job to them.
Deal Guru
Feb 29, 2008
12594 posts
7827 upvotes
neilsmith43 wrote: Only those who are not working are priced out. There are still lots of cheap properties e.g.apartments, condo. If they can afford apartments condos but only want to buy detached, that’s their problem.
Just like those don’t have high skills and good education but only want to get high pay job, they cannot complain there are no job for them. They cannot expect idiot wynne screw those high skilled professionals and assign the high pay job to them.
This. Plenty of affordable condos out there....oh but the complainers don't want condos. Plenty of affordable townhouses out there, oh but the complainers don't want those. Honestly, people who are complaining want unicorns. Houses in the city priced at $500K. That simply isn't going to happen.

I still think prices are on the verge of being completely out of wack, but the buyers who claim they can't find affordable homes are liars. They may not look like something out of Million Dollar Listing and maybe not in an amazing area, but there are plenty of homes out there for a reasonable price. A couple making $100K combined should be able to find a condo or stacked townhouse.

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