Unintended consequences of new mortgage rules
Editor: As an experienced mortgage broker in the Okanagan for 20 years, and resident of Kelowna for 52 years, I can see first hand how the new mortgage qualification rules have sidelined a large pool of buyers who would have been entering the market for the first time and realizing the benefits of home ownership.
Arguably, one of the most important aspects being: gaining equity. That part of home ownership is the key to saving to step up to the next purchase, building a nest egg, and ultimately living without a rent or mortgage payment later in life.
I am not a broker who hopes to provide every single person with a mortgage whether they should have one or not. I consider myself a responsible broker, helping people who qualify with the banks to get into the market then move up.
What I have witnessed in the past year in particular, with mortgage rule changes, is people who already own and are well established in the market have gained enormous equity with the improved economic conditions and are able to scoop up many lower-priced properties that new homeowners would have qualified for last year.
They are enjoying all the benefits of becoming wealthier landlords and owners and good on them.
However, †those who hoped to get into the market and who would have qualified even one year ago, have felt this dream slip through their fingers. I had many potential new owners preapproved last year, then after November, they no longer qualified for even affordable properties in the Okanagan.
This sudden, jarring sidelining of a whole pool of buyers, and the next into the market, has forced these now-unqualified people to continue trying to rent in an depleted rental situation.
I believe this is a critical, unforeseen result of the mortgage-rule changes, which has led to horrific added pressure on rental accommodation and conditions.
Frankly, good qualified people are missing out on leaving that all behind to become owners — something most people work hard and strive for.
The trickle-down effect is that those least able to afford home ownership are being forced out of rental properties by ruthless landlords who see an opportunity to hike up rents and force families out in favour of higher-paying tenants.
They’re using every trick in the book to do it as well. The favourite is evicting them for “family” to move in, which is allowed in B.C. Then simply hiking rents and finding higher-paying tenants. (Otherwise they aren’t able to hike rents beyond the annual allowable percentage).
You can’t imagine how many families are being evicted with kids and pets with absolutely nowhere to go. The rental market was not prepared to absorb this flood and landlords have their pick of the crop when 20 people apply to one property in less than 12 hours.
The November 2016 round of mortgage qualification changes is truly making the upper middle-class richer, the middle and lower middleclass are losing hope of living in an owned home, while students, millennials and poverty stricken are being booted to the curb in a terrible rental environment.
Please, I urge regulators and politicians to see this likely unintended consequence. I feel for people who have have lost the possibility of escaping renting and then all those enduring the resulting pressures of renting in this depleted rental environment.
Romany Runnalls, Kelowna