Finally, the Government of Canada has stepped in to try and cool the Canadian real estate market. As usual, the real estate agents either claim that these moves will damage the market while others say that it will have no effect. Pick the way that you think it’s going to go.
What are my thoughts?
It’s quite remarkable to see the spin that the government has put on this. These changes were easy to implement so one has to wonder why the government dragged their heals for so long. But that’s politics.
The guys that are going to get hurt are the last ones in (as usual) if the measures take hold. The change in qualifying for a mortgage using the five-year posted rate rather than the promotional rate is something that I have mentioned before. It should squeeze out the buyers that just squeak by.
Finally taking a hard line on the principal residence exemption was an easy fix that should have been done years ago. By the way, it’s not closing a loophole as some have written. It’s always been there as a provision that was poorly enforced by the Canada Revenue Agency. It’s not a loophole, it’s tax evasion. It’s about time.
The risk sharing with lenders will definitely put a lid on things as it will eliminate the shoddy underwriting standards of lenders who sloughed the risk off on the government.
Let’s wait and see, but it’s not good news for GTA and Vancouver real estate agents and mortgage lenders. But they will undoubtedly look for new games to play.