Artwalk condos. The new rules may help stabilize the housing market. The trend of the property market has always been one of the things that everyone is concerned about. In the past few months, the domestic property market was hot, and many buyers offered much higher prices than sellers. From next month, there will be new mortgage stress tests, which some financial groups believe may stabilize the domestic real estate market.
BMO Financial Group, the Montreal financial group, said new rules on mortgage stress tests and a drop in house prices and sales in some areas could ease the country’s housing market.
Erminia Johannson, head of the group’s North American personal and commercial banking business, said Wednesday that it is believed to slow down in terms of current house prices and sales.
However, Johnson pointed out that it is certain that the domestic mortgage market will remain quite strong for some time to come.
The new mortgage pressure regulations will take effect on June 1, when the eligible interest rate for uninsured mortgages will be set at two percentage points or 5.25% higher than the contract rate, whichever is higher.
The change is said to have helped ease the heat in property markets such as Toronto and Vancouver, where bidding wars, soaring prices and booming sales were the norm during the new crown pandemic.
Although sales are slowing and prices are falling, according to reports from real estate bureaus in hot markets, many potential buyers in the hot housing market believe that prices are still too high to buy homes in these areas.
Johnson said it was difficult to predict the impact of the new stress test rules, but combined with the slowdown in house prices in some areas, this could prompt buyers to seek more affordable housing for them or seek help from their parents.
Patrick Cronin, the bank’s chief risk assessor, said the bank was ready for what might happen under the new test rules.
In addition, Darryl White, chief executive of Manchuria Bank, said that the COVID-19 pandemic has brought unprecedented challenges to banks, which will have an impact for some time to come.