Implications of Canada's New Mortgage Rules

17 October 2016
Remax-Condos-Plus

On October 3rd, a firestorm hit the real estate market when the minister of finance announced two changes to mortgage rules. Last week we discussed what those mortgage rule changes where. This week we want to take a look at what the implications will be of the new mortgage rules, especially those of people having to qualify for the posted rate as opposed to the actual rate for their mortgage.

Will Prices Fall?

First off, with buyers having less money to purchase, will prices fall? The answer is no. In real estate, if the Sellers don't get their price, that is what the last property sold for, they just take the property off the market. They do not reduce their price.

What About First Time Buyers?

First time Buyers will have two choices going forward, buy smaller, not low rise but condos, or continue to rent. For those trying to trade up, they'll have to settle for smaller properties too.

How Will it Affect Sellers?

We will have less multiple offers. Properties will usually take 30-60 days to sell as opposed to less than 30 days today.

Will The Market Slow Down?

The market will go on to a pause for the next 4-5 months. Why? Buyers will wait, hoping for prices to fall. When they don't, they will re-enter the market

So, look for a late spring market and 2017 sales being below those of 2016.