ASR head Bill Madder said that the announcement focused on protecting the largest markets from a major fluctuation in the interest rate—a problem that is relatively muted in the ASR’s jurisdiction.
“The concern we have is that the areas of Saskatoon, Regina and smaller communities throughout Saskatchewan, there really isn't a large bubble here … Our marketplace is very different from the rest of the country and we would have concerns with the federal government trying to sort of use a one-size-fits-all solution,” Madder told CBC News
First-time and millennial home buyers will take the brunt of the worst effects of the regulatory changes, as they will need more time to save up for the higher down payments required under the new rules.
“I don't think this will affect sales greatly, but it may be a deterrent for some people that are just getting started,” Madder said. “We're concerned how this might affect the first-time homebuyer market.”
“Typical first-time buyer with about $50,000 per year income and a five per cent down payment, under the old rules they would've qualified for $302,000 purchase,” he explained. “Under the new rules, they qualify for $239,000, so there's a significant reduction in the amount of mortgage available and with their down payment the value of the house they can buy.”
In addition, “the new qualifying rate is 4.64 per cent whereas a number of banks were offering 2.25 per cent — so there's a significant reduction on a mortgage that's available to them,” Madder said.
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The chief official of the Association of Saskatchewan Realtors (ASR) warned that the stricter mortgage requirements introduced by the federal government—intended to moderate the overheated housing sector—will only aggravate the dire market conditions that entry-level buyers are already laboring under.