Federal policy changes designed to cool housing prices and demand continue to impact housing markets across Canada with cascading consequences and pressures, says a new report by Mortgage Professionals Canada (MPC).
The slowdown in the various housing markets across the country are more pronounced than anticipated, says MPC. “We are seeing downward trends and/or depressions in areas like the resale market, the outlook on employment in the housing construction sector and a continued decline in rental vacancy rates,” says Paul Taylor, president and CEO of the organization. “Federal policy changes are disqualifying potential first-time homebuyers and creating immense pressures on the rental market, which is in turn driving rental prices higher. It is a spiralling problem.”
The report says that improper policy levers can continue to depress the market.
“While the government has been focused on borrowers and interest rates, the reduction of activity in the housing market and extremely low rental vacancy rates will impact not only costs to first-time homebuyers and all renters, but also impact employment and the overall economy,” says Will Dunning, chief economist for Mortgage Professionals Canada and author of the report. “As a result of these policies, the economy will be weaker than it needs to be.”
Taylor says the association supports “prudent and evidence-driven actions to test a borrower’s abilities to make future payments. Our report illustrates that a more reasonable stress test level and lending restriction reforms are now needed to strike a better balance for borrowers and policymakers, improving housing affordability and Canada’s economy.”
Mortgage Professionals Canada is the national mortgage industry association representing 11,000 individuals and 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers.
