BILD wants adjustments made to house-buying policies

Rising interest rates and mortgage stress test are making it tougher to buy a home

The building industry association says it is time to rethink some of the policies that are making it tougher for Torontoarea residents to afford a home.

Builders are concerned about rising interest rates compounding the reduced buying power of the mortgage stress test, said David Wilkes, CEO of the Building Industry and Land Development Association (BILD).

“It’s time to take a hard look at those rules and make some adjustments such as looking at amortization periods and lengthening them because we’re concerned there’s going to be an exaggeration of the dampening effect of the stress test now that you have both it in place and the interest rates increasing,” he said.

The mortgage stress test, introduced in January, means borrowers have to qualify for a loan at two per cent higher than the Bank of Canada’s five-year benchmark rate or the rate they negotiate with the bank. The test is a rule that the Office of the Superintendent of Financial Institutions implemented. It means the buyer needs to be able to make bigger mortgage payments in the event that interest rates rise.

Wilkes made the remarks Tuesday with the association’s release of statistics showing that October was the best month of the year so far in new-con- struction home sales with 3,296 transactions of highrise and ground-level homes.

BILD continued on B11

Condos and stacked town homes, which accounted for 2,805 of those sales, were 44 per cent below the same month last year, but only one per cent less than the 10-year average.

The 491 single-family home sales, a category that includes detached, semi-detached and town houses, didn’t change year over year, but were 64 per cent below the 10-year sales average. New-home prices declined slightly month over month in both the condo and single-family sides of the market, although condo prices were up year over year to $775,537 — a14.5 per cent increase over October 2017.

Single-family homes, including detached, semi-detached and townhouses, averaged about $1.1 million, down 8.4 per cent, compared to October 2017, and were selling for about $14,000 less on average than they were in September.

The price per square foot for a single-family home fell to $438 per sq. ft. in October from about $480 a year ago. Condo square footage prices increased to $887 per sq. ft. in October from $791 per sq. ft. last year.

“You’re seeing the market show some signs of strength. It was the strongest month in terms of sales this year and we’re getting close to the 10year average as it relates to condos,” said Wilkes.