New Rules May Change Your Plans

Housing Market by David Salafia
Housing Market by David Salafia

Finance Minister Jim Flaherty recently announced new federal real estate rule recently to contain the hot housing market. While this rule won't have very broad impact, it may definitely affect certain groups of buyers.

The new rules say you have to be able to qualify for five-year fixed-rate mortgages, no matter what option you really aim for. It will affect mainly potential buyers at the edge of qualifying, who will be required to have higher income (but not necessarily monthly payments) to qualify since April 19, when the rule becomes effective.

It was designed to avoid potential resurrection of any real estate bubble in Canada and especially to prevent the low income group of taking a too big debt burden on their shoulders (as it happened in the USA).

The fact is buyers all around Canada are more cautious these days even without this direct rule; however in highly competitive real estate markets like Toronto, Vancouver or Calgary, people are often forced to accept higher risk. Naturally, these areas will be the most affected.

This rule is considered to be a very "light" regulation and some experts (like Adrienne Warren, senior economist of Scotiabank) agree it can help to control the market.

If you are about to use lower three-year rate to purchase a home, you should act quickly. After April 19 you will find it impossible!

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