Have new federal mortgage rules helped to cool a red-hot housing market in the Lower Mainland or have they simply stymied the dreams of first-time home buyers?
Chilliwack-Hope MP Mark Strahl says he’s heard from local homebuyers and mortgage brokers who are concerned the Liberal government’s changes are making it too hard for Canadians to qualify for a mortgage.
“These changes are taking away that dream of home ownership from thousands of first-time home buyers,” Strahl said in a press release issued Wednesday. “We have been hearing across the country that these Liberal changes are hurting Canadians.”
It was in October the federal government made changes to ensure homebuyers don’t take on mortgages they can’t afford in the light of very low interest rates.
The changes included a mortgage rate stress test to all insured mortgages, and new restrictions on insurance for low-ratio mortgages.
Strahl said the changes were implemented as a one-size-fits-all approach to soften prices in Toronto and Vancouver.
“Unfortunately, they have hurt housing markets across the country, including here in Chilliwack and Hope,” Strahl said.
— BC Real Estate Assoc (@bcrea) March 16, 2017
He pointed to B.C. Real Estate Association data that showed home sales in February were down almost 32 per cent year over year. Sales dollar volume was down almost 40 per cent and the average price fell almost 12 per cent.
But in Chilliwack, that’s not the case. February sales in the Chilliwack and District Real Estate Board (CADREB) were down to 217 from 283 in February 2016, but that came in one of the worst snowstorms ever. And that sales number was still 18 per cent higher than the 10-year average for February.
Demand is still coming in Chilliwack and with record-low listings, prices are remaining high. The average home sold last month was $421,545, a 21 per cent increase over the average of $347,466 in February 2016. In January, the average price was $432,043 up 38 per cent from $312,424 a year earlier.
Still, CADREB executive director Steve Lerigny says looking at the numbers alone don’t tell the whole story.
“Some buyers may have had to lessen the expectations of what they could afford to buy by the new rules,” Lerigny said.
He added that markets in Chilliwack all the way to Hope have seen in-migration from points west, as well as from Alberta, which is increasing demand locally overshadowing any impact the new mortgage rules might have.
Canadian Real Estate Association (CREA) President Cliff Iverson said in the association’s annual report that he has concerns about the mortgage rules.
“We believe that the Finance Minister’s recent changes to regulations affecting mortgage lending has increased housing market uncertainty among buyers and sellers,” Iverson said. “Some of those buyers, particularly in housing markets with a lack of affordable inventory of single-family homes, may be priced out of the market by the new regulations. First-time home buyers support a cascade of other homes changing hands, making them the linchpin of the housing market.”
Strahl said Canada’s mortgage rules were already among the strongest in the world, something that helped the economy weather the 2008 recession.
“Based on consultation with stakeholders across the country, the Conservative Party believes that these changes should be rolled back.”