The extension of a mortgage stress test to all homebuyers, including those with larger down payments, has had an effect on the level of sales in Greater Victoria say local finance and real estate professionals.
The new rules created by the Office of the Superintendent of Financial Institutions went into effect Jan. 1 and set a new minimum qualifying rate or B次元官网网址渟tress testB次元官网网址� for uninsured mortgages. The new borrowing rate must be the greater of the five-year benchmark rate published by the Bank of Canada, or the contractual mortgage rate plus two per cent.
B次元官网网址淚n real terms those rules meant that those people trying to qualify for a mortgage were suddenly qualifying for 18 per cent less that they would have before January,B次元官网网址� explained Andy Vickers, a mortgage professional with The Mortgage Group in Victoria.
B次元官网网址淲hen you combine that financial pressure with the fact that inventories are still down in Victoria, it isnB次元官网网址檛 surprising that sales have declined.B次元官网网址�
The latest Victoria Real Estate Board figures show 9.8-per-cent fewer sales were transacted in January than for the same period last year, when 478 properties were sold.
The sales of condominiums in particular fell 30.6 per cent from last year, when 118 were sold. That compares with the single family homes sales drop of four per cent from last January.
B次元官网网址淲e expected January to be a bit slower after the increase in activity we saw in November and December,B次元官网网址� said board president, Kyle Kerr. B次元官网网址淲hich was likely due in part to buyers entering the market early to avoid the new mortgage stress test.B次元官网网址�
The full effect of the new rules has yet to be seen, he added, B次元官网网址渁s many people attained a 90- to 120-day pre-approval before [Jan. 1]. We wonB次元官网网址檛 know how much that stress test will affect the spring market until we see the numbers, and spring is also the time when sales traditionally pick up.B次元官网网址�
But Tara Hearn, a real estate professional with Century 21, Queenswood Realty Ltd. in Victoria, said she hasnB次元官网网址檛 personally worked with anyone whose plans to enter the market were derailed by the new qualification rules.
B次元官网网址淚 think it has less to do with the rates than it has with the lack of inventory in Victoria,B次元官网网址� she said. B次元官网网址淚f you look at the sales of condos, for example, there just is very little out there on the market. A lot of new stuff is coming on, but itB次元官网网址檚 not ready yet and thereB次元官网网址檚 definitely a lot more needed.B次元官网网址�
Hearn explained that while there are homes still available at the high end of the market, the number of homes for sale in the middle price points are at a premium.
At the same time, she acknowledged, itB次元官网网址檚 likely the new mortgage qualification rates will have some effect. B次元官网网址淰ictoria is an expensive market and (with the new limits on mortgage qualifications) people are going to have to adjust their expectations.B次元官网网址�
