The much talked about “Stress-Test” rules talked about over the summer by OSFI have been made official, and will take effect January 1st, 2018.

Many suspect this will have an almost immediate impact in the Toronto housing market which Government’s of all levels have been trying to cool with limited effect on fast increasing house prices.

In case you aren’t interested in reading this entire blog, I would suggest anybody even considering buying a piece of real estate (and this includes new construction condos as well) to immediately reach out to a mortgage broker and get your application and pre approval done NOW, to help protect against the changes to come.

So, what are the changes and what impact will they have?

The main change will be the setting of a new minimum qualifying rate, or “stress test,” for borrowers making a down payment of more than 20% of the home’s value. In the past, stress test requirements only applied to insured mortgages (those with down payments of less than 20%,) most variable mortgages and mortgages with terms less than five years.

Is it needed. In a nutshell I would say yes, it is. Brining financial stability to the housing market is a good thing for almost everyone. Is it overkill with what’s happening in the housing market in Toronto of late where interest rate increases over the past 6 month’s, and rumours of another on its way, have already helped play into a slowing of the market alongside other government implemented changes?

This is the part we will have to wait and see. None of the changes we are seeing of late address the supply side of our housing crisis. It seems only the demand side is consistently been targeted. Our city and our country continues to grow, the multiple levels of government through legislation such as the Greenbelt Protection Act and other municipal restrictions on development, are curbing the ease to build.

This is why areas such as Hamilton, Guelph, St Catherines and Kitchener/Waterloo have been booming on housing as many buyers are being pushed out due to affordability. In many of these regions housing is now considered unaffordable as well!

You have government who are opening the doors aggressively through immigration and refugee to bolster our ranks in numbers, also restricting the volume of housing to meet the demand of a rapidly growing population, also implementing aggressive rules on rental restrictions. Draw your own conclusions but much of this doesn’t seem to add up?

Reach out to me if you have any questions on how this might impact you on a personal level, I’m always happy to be of help!