It’s certainly been a challenging year in Canada’s mortgage sphere. When you take into consideration January’s tightened OSFI regulations, as well as higher interest rates, many Canadians – whether they have a mortgage already or not – are feeling the crunch.

This was confirmed recently by July’s Report on the Housing and Mortgage Market in Canada. The annual study records data about home ownership, financial patterns and Canadians’ general sentiment about home ownership and real estate.

As one might expect, the report found that the effect of rising rates, a stricter stress test, new government policies in some provinces and further lending restrictions have played a part in suppressing housing activity. While this is felt particularly heavily in Toronto and Vancouver, it’s reflected throughout Canada as a whole. Here are some of the report’s highlights:

Mortgage qualification

Following the implementation of a stricter “stress test” for mortgages – which came into effect January 2018 – 100,000 Canadians have been prevented from purchasing a home. 54 per cent of people who would like to purchase a home in the next five years expect the stress test to have a significant impact on their ability to do so. Additionally, 18 per cent of buyers who could afford their preferred purchase otherwise would fail a stress test, making it more difficult for them to become homeowners.

Housing Market

One of the most impactful statistics in the report is the 229 per cent increase in average home prices from 1997 to 2017, which is more than twice the rate of Canadian wage increases. Not surprisingly, there is a 67.8 per cent rate of home ownership, down from 69 per cent in 2011. The report also found that Canadian resale activity fell by 12.5 per cent last year.

Public perception

As Will Dunning, chief economist for Mortgage Professionals Canada writes, “public sentiment regarding housing market has shifted decisively downward,” as a result of these new policies, most of which have made it more challenging for potential homebuyers to obtain mortgage financing. That being said, the report also found a “remarkable amount of stability” in down payments, for first time purchasers.

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