Over the past two days, we have heard from Members expressing concern for Minister Morneau’s announcement on Monday, October 3, 2016 regarding new measures to tighten the Canadian housing market. Many of you do not have an issue with the changes proposed to foreign ownership rules, however there is concern about the unintended consequences the proposed measure to “bring consistency to mortgage insurance rules by standardizing eligible criteria for high-and low ratio insured mortgages, including a mortgage rate stress test” will have on the local housing industry.
These concerns are mirroring by those of our colleagues throughout the Atlantic Region. Yesterday, we were in contact with CHBA Nova Scotia and CHBA New Brunswick, both organizations are hearing similar concerns from their members. It has been noted that these measures are intended to insure the Vancouver and Toronto real estate markets cool down. Expanding “stress tests” within the Atlantic Provinces will further exacerbate a soft local market and take buyers out of the market. Such measures may be appropriate for regions like Vancouver and Toronto but definitely not for the Newfoundland and Labrador and the Atlantic Region.
The housing market in NL has slowed down in recent years and today the first time home buyer and seniors are the majority of purchasers. With these new measures in place, consumers will be required to qualify for mortgages that are about $40,000 higher than the price of an average home price selling in the current market ($260,000 to $350,000 – price of new home). It is being estimated that we could see 30% to 40% decrease in the number of consumers qualifying for mortgages.
CHBA-NL has communicated these concerns with our NL MP’s and Minister of Finance, Cathy Bennett to voice our concerns regarding the proposed changes.
We will continue to work with our Atlantic CHBA’s and our National CHBA to ensure that the Federal Minister of Finance is aware of the impact on the Atlantic Region.