Barrie's housing market will feel the cooling effects of Ottawa's new mortgage rules but the extent of the chill remains to be seen, according to the President of the Barrie and District Association of Realtors.
Effective Oct. 17, any borrower with an insured mortgage will have to take a mortgage stress test.
Mortgage stress tests have so far only been required for borrowers who take on variable or fixed interest rates with terms less than five years.
But starting in two weeks, any borrower with an insured mortgage will have to qualify at the 5-year Bank of Canada fixed posted rate — currently 4.64 percent.
Michael Douglas, President of the Barrie and District Association of Realtors doesn't predict a huge impact - but there will be one.
"It will affect supply and demand because it will remove some purchasers from the pool of qualified purchasers. That means the demand will change," said Douglas.
"How much will the demand change? Who knows. Barrie is certainly a hot market and it is definitely being affected by the hotter markets in the GTA that's for sure because there's a spin off. A lot of people are moving here from there."
The government's move is designed to ensure borrowers can take on mortgages they can afford.
"I guess the government is forcing people to be prudent," said Douglas. "So it will affect business. It will remove some buyers for sure who will not qualify but I think prudent real estate professionals would encourage that behaviour anyway."
Ottawa will also close a federal tax loophole that has allowed non-residents to avoid taxes when they sell houses.
"In the last few years we see a lot of international interest in properties," notes Douglas. "I've experienced it myself where buyers are buying properties here just to invest money in Canada or to get some money in the real estate market. Will that have an affect? Sure that will have an affect. It reduces their buying power."
Douglas agrees sellers should be taxed if it's not their principal residence
"It's fair. The fairer the better."
And starting Nov. 30, mortgage insurance criteria for low loan-to-value ratio mortgages will need to meet loan eligibility criteria as tight as that for high loan-to-value insured mortgages
Homeowners with an existing mortgage or renewing their mortgage will not be affected.
Douglas says until stats can be compared, it's impossible to quantify the impact or to know if it will be measurable or not.
"The reality is, I don't expect it to be a giant impact personally because I would hope that most real estate professionals are guiding their clients in an appropriate way," said Douglas. "Just because you qualify for a two percent mortgage and your wouldn't qualify for a four percent mortgage doesn't mean you should take that mortgage. Maybe you shouldn't buy that property."
