In toronto real estate, the head of the federal housing agency is raising a red flag about the government of Canada’s real estate sector, saying affordability fears have spilled over from the country’s two most expensive cities to nearby markets.
In an opinion piece written Monday in the Globe and Mail, CMHC CEO Evan Siddall says the agency will create its overall danger rating for the national housing marketplace to “strong” from “moderate” for the first time when it issues its housing marketplace rating on Oct. 26, 2016.
” Affordability pressures suffered lower-income households the most and induce real socioeconomic outcomes ,” Siddall wrote.
” CMHC has recently observed spillover effects from Vancouver and Toronto into nearby markets. These factors will induce us to issue our first’ ruby-red’ warning for the Canadian housing marketplace as a whole .”
Siddall said high levels of indebtednes combined with rising home costs are often followed by contractions in the economy.
” The situations we now observe in Canada concern us ,” he wrote.
Siddall’s comments came the same day, October 17, 2016, that the new mortgage regulations introduced by Ottawa took effect. The regulations require a stress test exam for all insured mortgage applications to ensure borrowers can still repay their loans in the event interest rates rise or their personal financial positions change.
Until now, stress test exams were not required for fixed-rate mortgages longer than five years.
The federal government is stimulating the change to try to stabilize the country’s housing markets, particularly in Toronto and Vancouver where costs have soared.
Siddall said he supports the measure, even though it will cut into the buying power of some first-time buyers.
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