For housing markets in Canada, 2018 has been a year of restraint. But looking ahead to 2019, there are a number of potential outcomes to consider.
The mortgage stress test was perhaps the most influential policy change that affected homebuyers in 2018. Under the new rules, which came into effect in January 2018, most homebuyers were required to qualify for a mortgage at a higher rate than the contracted mortgage rate. This was done to determine the borrower’s ability to service the mortgage debt in case the interest rates suddenly increased.
To avoid qualifying for a mortgage under stringent regulations, many buyers advanced their housing purchases to 2017. Seasonally adjusted data from the Canadian Real Estate Association shows that more than 46,000 homes transacted across Canada in December 2017. With stress tests in place, housing transactions in January 2018 declined by 14 per cent from the month before.
Continue to read on: Financial Post