Federal mortgage rules mandating tight stress tests along with several BoC rate hikes since last year are blocking a significant proportion of hopeful Canadians from home ownership, according to a new analysis by RateHub.ca.
“When considered together, these changes mean that Canadians can qualify for less home, while also having to pay more per month for their mortgage,” RateHub prefaced its research.
The current benchmark qualifying rate of 5.34% is significantly larger compared to the prior 2.79% value. The adjustment, which took effect at the beginning of the year, has been roundly criticized by both market observers and the general public already laboring under an environment of decreasing home affordability.
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RateHub noted that would-be buyers at the average income brackets will face particular difficulty in Toronto and Vancouver, where they would qualify for less than half as many home listings this year (20% and 8% of active listings, respectively) compared to 2017 stress test rules (43% and 20%, respectively).
Home buyers in Calgary, Montreal, and Ottawa have greater luck than those in red-hot markets, fortunately.
Under the 2018 rules, average earners in Calgary will qualify for 77% of home listings, compared to 89% last year. On the other hand, those in Montreal are expected to qualify for 78% of active listings using the 5.34% value, compared to 87% in 2017.
Meanwhile, hopeful home owners in Ottawa weathered the implementation of the tighter stress tests really well, as they are expected to qualify for 90% of active home listings this year, compared to 95% prior to the new rules.