New tougher mortgage rules dampened Canada housing market
Canada, 5th November: Canada’s housing market is slowing down and this is due to introduction of new tighter Canada mortgage rules.
Canada housing market softening—Canada housing market has been witnessing a slow pace in the past couple of months and the onus for this must go to tougher rules for Canada mortgage.
According to an Economist with BMO(Bank of Montreal), Capital Markets, Robert Kavcic, tougher mortgage policies have moderated the demand for housing throughout Canada. There has been a downfall of 5.8 percent in Canada home sales for August as compared to the figures exactly a year ago.
Becoming effective on 9th July this year, new mortgage rules in Canada lead to lower sales of Canadian homes in 20 out of 26 Canadian cities(as compared to the figures for the month of July) in August this year.
And the most notable reductions in Canada home sales has been in Toronto and Vancouver with downfall of 7.8 and 9.3 percent respectively.
What’s the reason for slowed Canada housing market—It is a fact that Canada housing market has been choked due to tough mortgage rules. New rules have restricted Canadians’ ability to buy homes for the very vague reasons.
And this is evident from the fact that a large number of prospective home buyers in Canada have been facing tough times for the last one year or so. The worst to have been affected include the self-employed as well as the first time home buyers in Canada.
Young, self employed face difficulty in buying a home in Canada—If you are a young professional and self-employed desirous of becoming owner of a home in Canada, things may be difficult for you.
And since a large chunk of young Canadian professionals are self-employed, this is something a cause of great concern. They will have no option but to get their parents or any such close relation to co-sign the home loan despite being financially stable. This is true even for those having a high credit score(FICO).
Reason being that banks never seem to be understanding the concept of self-employment. What they want is the assurance of a regular salary and saving plans.
Another fact worth notable for self-employed Canadians wanting to buy a home in Canada is that money on your HELOC(Home equity lines-of-credit(that a bank may be wiling to lend has gone down to 65 percent from 100 percent of the total property value(appraised value).
A ray of hope—A good alternative in such a scenario is approaching credit unions or private lenders for borrowing money no matter you will have to pay a small fee for securing funds for home buying.