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New mortgage rules may mark the end of an era

release-the-krakenWill October 3, 2016 go down in history as the day the feds pulled the pin on a grenade which will severely impact the Canadian real estate and mortgage industry?

It’s not usually wise to make bold predictions about such matters – better qualified experts than I have routinely been wrong over the past several years. However, it does seem some very short sighted decisions have been made which may affect many current and would be homeowners.

Check out the latest article from Rob McLister at Canadian Mortgage Trends.

Here are some of Rob’s top predictions of the pending aftermath….

  1. ” Housing prices will tumble as a sizable minority of first-time buyers and those with higher GDS/TDS ratios no longer qualify for the mortgage amount they want.
  2. Forcing all insured borrowers to prove they can afford a payment at the posted rate (4.64%) will remove up to 15-20% of buyers from the market, say lenders.
  3. Mortgage availability will drop in high-valued regions like Vancouver and Toronto and rates will rise nationally.
  4. As competitors raise rates, banks will likely take that opportunity to hike their own rates.
  5. Market share for near-prime lenders will rise yet again, especially for refinances.Consumers, of course, will pay significantly higher interest for these lenders’ flexibilities.
  6. There will be a mad dash of refinances prior to the new October 17th qualification rules. Expect most lenders to stop taking such deals by mid-next week.”
  7. Many would be buyers with pre-approvals will realize they will no longer qualify for their mortgage in a week or so – expect a sudden spate of purchase offers.

Time will tell. Sad to say, but it seems to me that in an effort to tame the beast, the feds may unwittingly have unleashed the Kraken. McLister says ” the changes are a “solution to a problem that doesn’t exist” because only one in 357 Canadian homeowners defaults on a mortgage.”

Related article :Four major changes to Canada’s mortgage rules the Globe and Mail, October 04, 2016

Related article: Government has dealt a shocking blow to the real estate market, Ross Taylor October 03, 2016

Related Article: Why first time buyers should not throw in the towel, by Sean Cooper October 05, 2016

Related article: Opposition to Ottawa’s new housing rules, The Financial Post, October 11, 2016

Related article: Mortgage rules what do the changes mean?  CTV News, October 5, 2016

The last word from Rob McLister “With mortgage tightening finally starting to impact high-valued markets, this new round of rules has come too late, with too little forethought and too many consumer repercussions. It’s effects are so wide-reaching, so sudden, that something has me thinking it’s a conspiracy against non-bank lenders.”

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