Continue reading to hear my thoughts on what might be a looming Mortgage rule change that will effect Calgary’s housing market …
I think most current Real Estate owners, owners with homes for sale, and new buyers salivate at the thought of Calgary’s housing market seeing equity gains similar to that of Vancouver and Toronto.
I’m reading 10-13% year over year property value gains!
Who Would Like To See
Values Rise By 10-13%??
If you’re on the property ladder already, why not have the market take off? Some might argue “what goes up, must come down”. Or that a slow methodical growth, matching the growth of our economy/wages is best.
I think our Federal Government and the Bank of Canada are scrambling to cool Canada’s hottest housing markets and I think we could see more changes in our Real Estate sector as a result.
One obvious tactic to cool the housing market is to increase the Bank of Canada’s Key lending rate. This financial maneuver would trickle into ALL portions of Canada’s economy, as one broad stroke. I don’t think this is what our Government or Finance Minister wants.
Here is also something else to consider; in Canada’s two hottest housing markets, major home price increases are happening at higher price points ($800K – $1M+). This price point is somewhat limited to major metro centers in Canada.
Our Government Is DESPERATE To SLOW
Canada’s HOTTEST Housing Markets!
You might remember, from earlier this year, the minimum down payment requirements of homes priced at $500K or more increased. The minimum down payment on any home purchase price over $500K, is 10% on the amount over $500K.
For example, the minimum down payment on a $800K purchase is:
$500K @ 5% = $25,000
$300K @ 10% = $30,000
Total minimum down payment on a $800K purchase = $55,000
I think this kind of targeted Mortgage rule change, for higher priced homes in Canada, is potentially being considered again. Do know this …any Mortgage qualifying rule change is NOT regionally specific and WOULD affect Alberta’s housing market (RE: Calgary)
[da, da, daaaa ..terror music]
Here’s How They Might
Slow Our Market!
One possible Mortgage rule change might be to decrease the maximum qualifying amortization for $800K – $1M home purchases to 20 years. Decreasing this amortization would raise Mortgage 
lender qualifying ratios, requiring more income or a smaller Mortgage amount to help potential homebuyers qualify to purchase the subject property.
This kind of Mortgage rule change (or something similar) is the equivalent to using a scalpel instead of a sledgehammer. The intended result would be to cool the price segment, in areas of Canada that have high valued homes (Toronto, Vancouver). Of course, Calgary ALSO has this price range segment and we would be effected too.
There’s A Downside Though …
One downside of this speculative rule change might be if potential buyers cannot afford their originally intended purchase price point, they would naturally look at lower price points, driving up demand in those lower segments. I think this would continue high year over year home equity gains at these lower price points? I think if the same fundamentals of supply and demand still exist for Real Estate, even this kind of Mortgage rule change would still not completely stop a hot market.
However, I also the the “do nothing” strategy in our housing market isn’t workable for our Government.
I think when any decisions are made that effect Mortgage qualifying, the powers that be take great care in anticipating potential results in housing markets throughout Canada.
To be clear, I am speculating on potential Mortgage rule changes at this point. Please visit my website again for local housing data and other Mortgage/Real Estate news.
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If you are thinking about entering Calgary’s housing market, and appreciate being educated on your home purchase experience AND getting today’s lowest interest rates, please email to subscribe to my list (chad@canadamortgagedirect.com) OR call me directly: 403-809-5447
Thank you,
Chad Moore
