In toronto real estate, the head of the federal housing agency is elevating a red flag about the state of Canada’s real estate sector, saying affordability fears have spilled over from the country’s two most expensive cities to nearby markets.
In an article published Monday in the Globe and Mail, CMHC CEO Evan Siddall says the agency will raise its overall peril rating for the national housing marketplace to “strong” from “moderate” for the first time when it issues its housing marketplace evaluation on Oct. 26, 2016.
” Affordability pressures suffered lower-income households the most and induce real socioeconomic consequences ,” Siddall wrote.
” CMHC has recently find spillover results from Vancouver and Toronto into nearby marketplaces. These factors … will induce us to issue our first ‘red flag’ admonishing for the Canadian housing marketplace as a whole .”
Siddall said high levels of debt be included with rising home prices are often followed by contractions in the economy.
” The circumstances we now observe in Canada concern us ,” he wrote.
Siddall’s comments came on the same day, October 17, 2016, that new mortgage regulations introduced by Ottawa took effect. The regulations require a stress exam for all insured mortgage applications to ensure borrowers can still repay their loans in the event interest rates rise or their personal financial situations change.
Until now, stress tests were not required for fixed-rate mortgages longer than five years.
The federal government is attaining the change to try to stabilize the country’s housing marketplaces, especially in Toronto and Vancouver where prices have soared.
Siddall said he supports the measure, even though it will cut into the purchasing power of some first-time buyers.
