15 January 2018

Today, all borrowers with at least 20% down payment have to prove they can withstand a potential rate hike, so they need to qualify under the greater of the contractual mortgage rate plus two percentage points or the central bank’s five-year benchmark rate.

“It’s interesting whether the monthly sales activity keeps rising in spite of the stricter rules,”- Gregory Klump, CREA’s chief economist noted.

Last month, the number of listed properties was up by 3.3% from November, and home sales rose by 4.1% annually.

Such changes suggest that Canada is recovering from the last summer’s slowdown, when we saw a sharp sales decline until he Ontario government introduced a set of new rules in April. As a result, Toronto market showed the necessary cooling in the second and third quarters after an extremely hot beginning of the year.

“The new OFSI measures and higher interest rates should prevent speculation and restrain the price growth at a necessary pace for the rest of the cycle,” – BMO Capital Markets senior economist Robert Kavcic said.