Mortgage rules could cool hot market

Jim Flaherty's recent announcement that the government has chosen to tighten mortgage lending regulations has led to much discussion surrounding potential effects to the housing market, specifically higher priced areas such as Vancouver and Toronto. This piece from the Vancouver Sun explores the possible outcome these new rules will produce.

Under the new regulations, including a lower maximum amortization period and increased gross and total debt service ratios, it is speculated that the average first-time buyer would have to earn an extra $500 and pay $209 more to their mortgage each month. First-time buyers, notably those in Vancouver and Toronto, are typically singles or young couples who are looking to enter the condo market. Price ranges of $350,000 - $400,000, combined with shorter amortization periods will mean many buyers will no longer qualify for a mortgage. Many analysts believe the new regulations were an unnecessary attempt to slow the heated housing market, which has already been slowing steadily. Over the last six months, home prices in Vancouver have lowered 12% and sales volumes have slowed as well, signs that the market is correcting.

For those who are unsure about how the new regulations will effect their ability to qualify for a mortgage, it is prudent to seek the advice of a professional Canadian Mortgage Broker. A Mortgage Broker will assess an individual financial situation and budget to find the mortgage solution that is best suited.

To read the full article from the Vancouver Sun, click here.