New Mortgage Rules to Reinforce Soft Landing in Canadian Housing

Beata Caranci, SVP & Chief Economist |  416-982-8067

Michael Dolega, Director & Senior Economist | 416-983-0500

Diana Petramala, Economist | 416-982-6420 

October 20, 2016 |

Highlights

  • Earlier this month the Canadian government announced a new set of mortgage regulations and tax measures aimed at ensuring the health and stability of the Canadian housing market, marking the sixth time mortgage regulation has been tightened since 2008. 
  • The new measures may create near-term volatility in the existing home market, but should eventually help to reinforce a slowdown in Canadian housing markets amidst gradually rising interest rates – already embedded in our forecast. 
  • The scope and timing of the new rules pose a downside risk to our forecast, particularly for the Toronto and Vancouver markets which look to be most impacted by the new regulations. 
  • The gradual layering of regulation, amidst rapidly rising home prices, has made homes less attainable for many buyers, particularly those contemplating homeownership for the first time.

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