Single-family market holds up to new mortgage rules

While stricter rules are now in place for people looking to qualify for an uninsured mortgage, it hasn’t dampened demand for single-family homes in the Calgary area early in 2018.

The Office of the Superintendent of Financial Institutions rolled out revised guidelines for residential mortgage writing practices and procedures, starting Jan. 1.

This includes a new “stress test” for uninsured mortgages that requires the borrower to qualify at the higher figure between the fiveyear benchmark rate published by the Bank of Canada and two per cent above the contracted mortgage rate.

Between Jan. 1 and Jan. 30, the most current data available, there were 527 single-family homes sold through Calgary’s resale market, says the Calgary Real Estate Board. This marks an increase of nearly two per cent over the same days in 2017.

The rule change hasn’t drained activity in sales centres for new homes either, say some companies building in the Calgary area.

“It hasn’t hurt us at all,” says Murray Danyluk, manager, sales and marketing for Stepper Homes. “We are still seeing great traffic and have great prospects in all areas over $600,000. We have had a good positive start to the year.

“Our lower priced product is selling faster than the higher price product, but that has not been because of people not qualifying for a higher mortgage,” he adds. “We have noticed that the higher priced buyers are making more educated decisions by being budget conscious when planning a home, but we don’t feel the mortgage rules have affected that.”

Bryan Grosul, general manager of WestCreek Homes, says his team started advising potential customers prior to the new year about the upcoming mortgage rule changes and what it meant for them to qualify.

“We have been monitoring the feedback from customers since Jan. 1 about the changes, but there has been no concern or questions so far,” he says.

“While we have mortgage specialists available to work with people and assist them, we have yet to see much impact in our price point,” adds Grosul. “The traffic numbers this past month have been about the same as this time last year, but the quality of traffic has certainly increased.”

With that said, price sensitivity continues to be a focus for most buyers, says Grosul, adding his team has noticed more house hunters emphasizing smart use of space rather than pricey upgrades.

“Currently we have seen a strong start to 2018, however, affordability has certainly become more of a factor since the new mortgage rules,” says Lindsay McGregor, sales manager and vice-president, business development for Crystal Creek Homes.

“We have seen buyers still willing to purchase but understanding they may have a smaller wish list than before ,” she says .“In addition, I think the fear of further rising interest( rates) has encouraged more buyers to move forward with their purchase sooner than later, which may have helped with momentum.

“As mortgage rates potentially rise, however, qualification will just get more difficult and will more than likely cool the market,” she adds.

We have seen buyers still willing to purchase but understanding they may have a smaller wish list than before.