By Staff The Canadian Press
Posted April 8, 2021 2:50 pm
Updated April 8, 2021 2:52 pm
4:24 What’s driving Toronto’s hot housing market? A real estate expert breaks it down
Real estate expert John Pasalis talks about the hot housing market and the buying frenzy that pushed the average home price past the record breaking one million dollar mark last month. – Mar 9, 2021 The federal banking regulator is proposing to up the stress-test facing homebuyers with uninsured mortgages in light of the economic ripple effects from the COVID-19 pandemic.
The proposal from the Office of the Superintendent of Financial Institutions would set the qualifying rate for uninsured mortgages at the contracted rate plus two percentage points or 5.25 per cent, whichever is higher.
As it stands, any buyer whose down payment on a home is less than one-fifth of the purchase price has to show they can afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or the five-year benchmark rate published by the Bank of Canada which sits at 4.79 per cent, whichever is higher.
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Rock-bottom interest rates, increased demand for homes and a shortage of supply have heated housing prices and prompted calls on the federal government and regulator to tighten rules to cool the market.
2:43 Bank of Canada issues warning about overheated housing market
Bank of Canada issues warning about overheated housing market – Feb 24, 2021 The regulator in a statement says current housing market conditions have the potential to put lenders at increased financial risk should economic conditions deteriorate.
The statement goes on to say that the proposed qualifying rate would add a margin of safety so borrowers will still be able to make mortgage payments if rates rise or they see a drop in their income.
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