2. MORE MORTGAGE REGULATIONS

THE LATEST ROUND of tougher mortgage regulations last October required that consumers with loans backed by the federal government have to qualify using the posted five-year fixed rate of 4.64 per cent — almost 200 basis points higher than market rates. That resulted is larger mortgage payments and smaller loans.

Critics also complain that restricting mortgage insurance to homes that cost less than $ 1 million does little to cool markets such as Toronto, where the average detached home sold for $1.56 million in March.

“The last set of changes were the most impactful since they started,” said Phil Soper, chief executive of Royal LePage Real Estate Services Ltd., noting reports that 20 per cent of first-time buyers are now out of the market.

“When you take first- time buyers out of play, there are less move- up buyers, and when there’s less move-up buyers, there are less luxury buyers,” he added. “The problem is it takes some time to work and we have governments in Ontario and British Columbia that don’t have time because they have elections.”

Another plan bandied about is for Ottawa, through the Office of the Superintendent of Financial Institutions, to place tighter restrictions on low-ratio mortgages, those with more than 20- per- cent equity that are not required to have insurance.

“It’s time to get away from restrictions on just the insured market,” said one executive, who asked not to be named. “OSFI could easily force banks loaning money to people with low- ratio mortgages to also qualify based on the posted rate, effectively restricting access to debt.”