Recently we all have heard about shocking news about Canada latest news regarding new mortgage rules. The action which comes into effect yesterday has made the whole people in Canada becoming stress on the decision since it changed fixed-rate mortgages no longer than five years. The purpose of the government making the change is to stabilize Canada’s housing markets in certain serious areas such as Toronto and Vancouver where prices have gone up very high. In On October 3, Finance Minister Bill Morneau has announced new mortgage eligibility criteria for home buyers and lender. He stated that the action will be effective on 17th October 2016 and will have significant effect on the country’s mortgage industry.
Before we proceed further, do we really understand what the mortgage rules are about? Let us reveal one by one and discover the meaning. By having this rule, it means homebuyers now have to put at least 10 percent down payment on house purchasing which cost more than $500,000. Houses for cost lower than $500,000 still remain as 5 percent.
The big question is, will the mortgage rules in Canada could shake up the real estate industry? Who will be affected from this rule? Of course the people who live in Toronto and Vancouver will feel a big stress upon this new rule. They need to put high down payment on purchasing their first house. For those who purchases house with price of $700,000, they will need to pay for down payment which rise up to $45,000! However, for those who already own a house at this area, they won’t feel the pain so much since they have built up equity in those properties.
As what has been mentioned by Bill Morneau in Global News, the new rules will affect at least one percent of real estate market. People needs to spend a lot on down payment and it will make people less purchasing houses at this area. Let us make a picture, people who has medium range of wage requires re-planning on purchasing their new house since this rule has taken on action. What is the new plan they need to implement? Look for smaller house which range lower than $500,000 or find any other houses outside this area. This can at least affect the lifestyle and comfort ability of certain families and needs for person to travel outside this area looking for cheaper house.
What is the good side of this rule? It would at least help to reduce high debt among the people on this area by tighten the rules of house purchasing and let people who really capable to own a house buy their house at this area. It is been stated that Toronto and Vancouver has very critical issue on this matter and the finance minister won’t hold on anymore to this issue since serious action needs to be done. In the future, we could see people with stable salary lives on this particular region and which we might think it could help the government solve the problem of price increment at this area. Any decision comes with good and bad comments, but it is made for better future of the region.