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Tight Mortgage Regulations Could jolt Housing Market in Canada


Tighter regulations on lending mean that getting mortgages becomes tougher for many Canadians, even those who have full-time employment. The decision of the federal government to tighten the regulations on lending is actually made to reduce the rising levels of household debt in Canada. However, this action also cooled down the hot real estate market of the country.


According to some real estate experts, mortgages are available for self-employed people and even to those who are living in rural areas in Canada or even to people with poor credit history. However, mortgages will be at high prices. There will also be higher repayments and higher down payment. Moreover, there will be a problem with the lenders who will no longer consider the tax breaks. With this, their income might appear lower for the mortgage payment.


The mortgage payments will also be limited to thirty-nine per cent of the gross personal income. The total debt-service ratio of the applicant will also be capped at forty-four per cent, which is a move that is mainly designed to make sure that the borrowers will be capable of handling property taxes and some other costs that are associated with having a mortgage.


However, the said new regulation could help control the demands for condominiums too. Condos have few of the lower price points. When taking a closer look at the mortgage regulations, they also tend to become used most extensively by those first-time buyers. This only means that the changes made in the mortgage insurance regulations will greatly affect the first-time buyers and eventually, it will affect condos.


The housing affordability in Canada has also been affected and it becomes more daunting and challenging for many Canadians to buy a home or real estate property in the country. It is also vital for those who want to buy a home in the country to understand first the new rules.

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