Fitch ratings: Mortgage rules a 'step forward'

Fitch ratings: Mortgage rules a 'step forward'

Fitch ratings: Mortgage rules a The new rules will cool the markets in Toronto and Vancouver and improve credit quality, according to the agency.
“Fitch believes that the new measures may temper the housing market, especially in cities that are significantly overvalued,” Fitch said in a report, released Wednesday. “According to a Fitch study published earlier this year, home prices across Canada are estimated to be about 25% above their sustainable value with major regional variations.”
Fitch is supportive of the income tax rule change, which targets foreign owners of real estate.
Under those guidelines, foreign owners are no longer able to take advantage of capitals gains tax exemptions.
“The income tax rule change in particular should reduce housing demand from foreigners. In Vancouver, this will reinforce the effects of the 15% tax on foreign home purchases put in place by the British Columbia government in August,” Fitch said. “Data from the Real Estate Board of Greater Vancouver indicate that average sale prices of detached houses have already dropped by roughly 16%, led by higher priced properties.”
The agency also argued the new guidelines for insured mortgage portfolios could impact non-insured underwriting.

“While insured mortgage loans are prohibited from securing this subsector of the covered bond market, changes to insured mortgage loan underwriting requirements could influence non-insured mortgage loan underwriting requirements. Any tightening of non-insured mortgage loan underwriting requirements would further help to cool the housing market and also help to address the concern of heightened borrower leverage.
  • Jeff L. 2016-10-12 3:13:37 PM
    The issue is that these rules should have been targeted specifically at the Toronto and Vancouver, and not on a National level. I have said it before, but Canada is too big of a country, with too many unique markets for nationally based mortgage regulations to make sense. The same goes for central bank regulations. Compare Toronto to, let's say Windsor, or let's say even the very stable market of Ottawa.... it makes no sense for any of these three markets to be lumped in together as one.
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  • Kris Kooblall 2016-10-13 5:10:52 AM
    Canada's Housing Crisis

    The recent changes by the Federal Government of Canada in the housing and mortgage industries appear very positive and its impact overall on the housing crisis here in Toronto especially will be borne out over time.

    There are simply no plausible explanations from the city of Toronto and the province of Ontario as to why they are opposed to introducing a 15% tax on foreigners purchasing real estate here in Toronto when the evidence is simply overwhelming and the urgent call for the introduction of this tax against foreigners have come from many distinguished quarters.

    The results, if any, are sluggishly making their way into the Toronto residential real estate housing market.

    Yet a drive around the city reveals the urgent need to have the taxes against foreigners introduced here in Toronto.
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  • YYC-Mortgage 2016-10-13 10:05:13 AM
    @Jeff L. Agree 100%
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