12 August 2019

“The main factor of this change is the drop in mortgage rates,” – National Bank economists Matthieu Arseneau and Kyle Dahms noted.

Together with unchanged or declining home prices in many markets and faster wage growth, it created the perfect conditions for the affordability improvement.

However, they say although it’s easier to manage mortgage payments, buyers still have to undergo the mortgage stress test, and the rate used for that was down by only 0.15%.

“Most potential homebuyers which were pushed out of the market by the stress test still remain there”, – the economists said.

Nevertheless, the conditions may change, as Toronto and Vancouver are reporting signs of acceleration, with July home sales rising by 24% in both markets annually.

Many specialists believe the market has adjusted to measures aimed at cooling a sharp prices increase and borrowing, including foreign buyers’ taxes and the mortgage stress test. Moreover, borrowing costs are going down across the world, and it could push Canada’s rates to the new low levels.

Some worry that such changes may return us to an excessive price growth.