Those looking to buy a home might find it a little harder now that the stress test for mortgages rose Tuesday.
The stress test — the minimum threshold anyone applying for a home loan in Canada hast to meet — is now set at 5.25 per cent, or two full percentage points above the borrower’s mortgage rate, whichever is higher.
It doesn’t make the loan itself any more expensive.
Rather, it ensures anyone getting a mortgage will be able to pay it off if rates go up. But the impact on anyone trying to buy a home is significant, according to realtor Nancy Stratton.
“This weekend was really busy with multiple offers. You saw people really scrambling to get in before that June 1 deadline.”
Andrew Wade is a mortgage broker with DLC Modern Mortgage Group.
He said the pressure on buyers is now much more intense.
“It’s absolutely bananas, and people are just further and further relying on their family to help them out, especially their parents,” Wade said. “The bank of mom and dad to help them breach into the housing sector to help make that a reality.”
Alan Wade is looking for a single family house, and just toured this property, but there is little inventory available.
The competition for any property, particularly single family homes, is steep.
“Got to put an offer in almost day one, no inspections,” Wade said. “And it’s stressful when you are buying a house.”
Erin Smith is providing moral support for her friend as he house hunts.
She said the pressure to jump on a home is increasing for many buyers anxious not to lose out.
“Absolutely. You feel it too when you see people coming and going into a house,” Smith said. “You can kind of feel the anxiety, you are wondering what they are thinking, are they going to put an offer in?”
Realtor Sophia Briggs said all buyers are impacted by the mortgage stress test change.
But she said first-time home buyers are finding the change targets them in particular.
“Someone that has a home like this and they are trading around in the market they are not going to be as affected as much,” Briggs said. “It’s people getting into our market that are going to have a hard time.”
The Bank of Canada wants to cool down markets, such as Greater Victoria’s, where competition for most homes continues to drive up prices.