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Predicting The Housing Market

WILL THERE BE A MARKET CRASH OR CORRECTION in Canada

My answer to that is that it’s highly unlikely

Canada has a continuous growing population.

In 2018, 303,257 people immigrated to Canada.

Over 303,257 people move to Canada per year and m

ostly moving to GTA and surrounding area and these people are bringing wealth and great job skills..Highly skilled and trained Immigrants need a place to live Rents are so high and the housing prices keep going nowhere but UP. Canada is also very strict about lending. There is the STRESS TEST in place for this reason. The STRESS test insures that even if the interest rates go up that person getting the mortgage will be able to manage the higher payment. WE DON”T GO NUTS on OVERLENDING like our USA friends...Thankfully. Although it makes my job more difficult to get my clients qualified, I’m happy that we have these securities set in place to protect our financial state.

Immigration to Canada (for my friends across the globe who would like to come here)

Predicting The Housing Market

In the end, it’s become difficult to predict what the real estate market will look like in the years to come. Since the price of homes and the cost of interest have been on a steady rise, it’s no wonder that the government is worried about just how bad the level of household debt amongst homeowners can get. So, whether or not you agree with the OSFI’s new housing regulations

Here is something important straight from the OSFI (office of the Superintendant of Financial Services)WEBSITE:

Strong Mortgage Underwriting

The first version of B-20 was issued in 2012. At that time, the role that weak mortgage underwriting had played in the global financial crisis was clear. While we did not see evidence of the extreme risk-taking that occurred elsewhere, OSFI chose to be proactive and to set out clear expectations for strong mortgage underwriting in Canadian banks.

Some years later, in 2016, we reminded banks of our expectations in the form of an public letter, in the face of what we observed as escalating competition, historically low interest rates and rapidly increasing property values leading to some deterioration in underwriting practices.

That reminder had some impact, but, in our judgement, not enough. The prevailing sentiment that house prices would only go up and interest rates would only go down was, in our view, contributing to an over reliance on collateral value and not enough scrutiny of a borrower’s ability to repay a loan, particularly if conditions were to change.

Against a backdrop of record levels of consumer debt, this was a level of risk-taking that OSFI decided needed to be reigned in.

That brings us to the changes to B-20 that came into effect in January of last year; the most significant of those being the stress test.

The stress test requires a borrower be qualified for their mortgage with a buffer of affordability built in to ensure they can continue to pay their mortgage if conditions change. Those conditions could be a rise in interest rates that increase their payment obligation, or they could be a loss or reduction of income or an increase in other, non-mortgage expenses.

The stress test is, quite simply, a safety buffer that ensures a borrower doesn’t stretch their borrowing capacity to its maximum, leaving no room to absorb unforeseen events. This is simply prudent. It’s prudent for the bank and it’s prudent for the borrower too.

Here is the link:

the mortgage stress test is mandatory to all potential homeowners and those switching lenders must do. If you’re applying for a high-ratio mortgage the stress test will apply. You may not be able to afford as much house as you were initially hoping but it’s much better than getting in over your head.

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