New rules could put home ownership out of reach for some Calgarians, say mortgage brokers
Those seeking an insured mortgage will need to pass a so-called "stress test,” to prove they can afford it
Some Calgary-area mortgage brokers are upset about Ottawa's new real estate rules around qualifying for financing.
Starting later this month, those seeking an insured mortgage will need to pass a so-called "stress test," meaning they'll have to prove they could afford their payments at a higher interest rate.
Alim Charania, a mortgage broker with Dominion Lending Regional Mortgage Centres said reactions he's seeing include, "a lot of panic."
"Almost the equivalent of kicking someone when they're down, especially in this Calgary economy, the way things are," he said.
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"I know they're trying to cool two markets [Vancouver and Toronto], they could've maybe applied these rules to those markets to begin with and see how things settled out and go from there."
The new rules could further soften an already weakened housing market in Calgary.
"So realtors, brokers, specialists, mortgage specialists, appraisers, lawyers, home inspectors, they could all be affected by this downturn even more so than they already are," he said.
Another unintended consequence could be increased rents due to demand, said Charania.
"Because if they can't purchase, they'll stick to renting," he said.
"I think they're trying to do it for the better good, for the greater good I guess (laughs), but they're forgetting that there are people in between those two cities, those two provinces, that are being affected, and potentially negatively at this point too."
But ReMax realtor Bev Clark called the changes a good move, especially in Calgary
"It's good for people to live prudently," she said.
"And I typically recommend to my clients that they not buy at the top level of what they can afford, but that they buy some place below that. Affordability is affordability is affordability. So whether you're affording it in Calgary or whether you're affording it in Vancouver or Toronto, certainly you need to qualify to purchase and to qualify at a higher interest rate is not all bad because it gives everybody an additional safety net."
Charania said it doesn't make sense someone can get approved for a $100,000 car loan "with an $800 or $900 payment" without having to go through the same screening.
"That's the equivalent in some places of a mortgage payment and you don't have to go through the process you have to go through with a mortgage, and in the big scheme of things, that's a depreciating asset, whereas at least over time homes and houses have appreciated," he said.