The New Year is a time for resolutions, commitments and sometimes purchasing new homes. It is expected that in 2019, the strong regional economy in Ontario coupled with its steadily growing population will increase demand for residential housing. The recent immigration policies opening the region to more human resources is expected to push the demand even higher.
However, the supply is not necessarily meeting the demand. The number of residential listings in Ontario fell by 2.7 percent in October 2018 from October 2017. In addition to the Ontario unemployment rate at 5.6 percent, there is evidence that the residential real estate market in 2019 might become narrower. To simply put, the lack of housing supply will remain an issue in 2019.
The quarterly forecast on the housing market by The Canadian Real Estate Association (CREA) also shows that policy changes have impacted homebuyers and access to mortgage financing for residential housing markets. It is predicted that interest rate increases, steady high prices and the new federal mortgage stress test will affect residential real estate sales in 2019.
So, what is the new Federal Mortgage Stress Test? Introduced in 2018, new mortgage rules require all home buyers to undergo a mortgage stress test – even if you make a down payment of 20 percent. This is done specifically to make sure that you can still make your monthly mortgage payments if interests rise in the future. If you are thinking of purchasing a new residential real estate property in 2019, the stress test will directly affect how much you can afford.
Thinking of how the new mortgage rules and rising prices might affect you in 2019? Contact Canada Mortgage and Financial Group for expert advice and knowledge on the residential real estate market.