The Federal Gov’t recently made drastic changes to the mortgage rules without the consultation of stake holders. The reason for these changes were largely cited to protect buyers from over reaching on mortgage debt and creating the same chaos as was created in 2007 south of the border.
While, in theory, it is a good move there are better ways to do this. Perhaps it would have been better to apply the qualifying rate but extend the amortization to 40 years. This way the buyers would be protected in knowing that they can afford a higher interest rate but keep buying a home more affordable- especially for First Time Home Buyers.
However, I believe what will happen and we have already seen it already, is that East will move West. Currently in Waterloo Region we are seeing GTA buyers coming to our area where homes are more affordable and where someone can get more bang for their buck. As GTA homes are quickly getting out of reach for many buyers this trend will continue and will put more pressure on house prices in our Region.