A new REMAX survey revealed most Canadians are in the dark about the looming mortgage lending rules, but that doesn’t mean they have to be left behind when they’re ready to buy.
Christopher Alexander, regional director at REMAX Integra, says advising clients about their options will be paramount to helping people find homes in the coming years. While the survey results revealed that many Canadians haven’t kept abreast of the latest regulatory changes, Alexander says sales agents, brokers and other real estate professionals are the conduits through which information travels.
“It’s important to stay informed and make sure (sales agents) have all the information that the consumer they’re working with might need,” he told REP. “Our agents are so productive that they know what’s going on in the market from day-to-day and they know things can change in an instant. If consumers work with professionals who transact consistently, they’ll be well guided.”
The Bank of Canada recently announced that under the new lending rules, 10% of Canadians will be disqualified from mortgage qualification—a number that reaches 12% in Toronto and Vancouver.
REMAX’s survey results reveal 37% of Canadians aren’t aware of the regulatory changes. However, of the 58% who are, 27% don’t believe they’ll be impacted, while 18% do; and the remaining 13% are unsure of whether or not they’ll be affected.
Forty-eight percent of respondents plan on buying a house within the next five years, and Alexander says it’s important to ensure consumers don’t have misguided expectations about what they can afford. Fortunately, he added that, for those unable to qualify for their desired abodes, there are solutions.
“I’d tell them they should be looking to more affordable neighbourhood and cities,” he said. “If they can’t get approved in Toronto, look in Mississauga or Oakville, and continue to save as much money as they can because the bigger the down payment they have, the more flexible their mortgages will be. Or turn to an alternative lender if they really absolutely need to buy, because private lenders are giving people mortgages at the real rates, not the stress test ones.”
In spite of the Bank of Canada’s prediction, Alexander doesn’t anticipate too many people will be prohibited from entering the housing market. People can get creative by opting for longer amortization periods, for example.
“It could be a rude awakening if they have no pulse of what’s going on in marketplace, but younger homebuyers are getting creative,” he said. “They’re going elsewhere and looking at commuting, and going to where they can buy a house.”