[HALIFAX, NS] — New federal mortgage rules announced by Finance Minister Jim Flaherty on Thursday could have negative economic impacts on Halifax’s housing market, according to a local broker.
Dartmouth-based Clinton Wilkins said the changes could soften the Atlantic Canadian housing market.
“I think that the government is certainly trying to slow the market,” Wilkins said. “And I think that there is going to be negative economic spinoffs from these changes, because if there is less transactions … it’s not just the mortgage broker or the bank (that is affected), there’s realtors, there’s lawyers, there’s appraisers.”
The federal government is cutting the maximum amortization period for government insured homes from 30 years to 25 years — essentially upping buyers’ monthly mortgage payments. On top of that, the feds are limiting how much homeowners can borrow against the value of their homes — from 85 per cent to 80 per cent.
Prospective buyers will also have to prove they have the means to afford mortgage payments, property taxes and utility costs on their new homes through cost ratios based on their income.
The moves are being billed as a way to encourage Canadians to slow the accumulation of household debt.
“It will mean that some people will not buy into the market, it will also mean that some people will … buy a less expensive home or (a) less expensive condominium,” Flaherty told reporters in Ottawa.
“Good. I consider that desirable.”
The government anticipates that about five per cent of Canadians considering buying a new home will no longer qualify.
But Wilkins said he doesn’t believe Canadians need that encouragement. He thinks Canadians are more conservative than our American or European counterparts when it comes to big-ticket purchases and borrowing.
“We are much more conservative … we’ve really weathered the (economic downturn) storm quite well,” Wilkins said.