Interest-rate hikes, mortgage rules stifle Vancouver home sales
VANCOUVER — Home sales in Metro Vancouver fell more than 14 per cent below the 10-year average in February as buyers contended with stricter mortgage rules and higher interest rates, according to statistics released this week.
The Real Estate Board of Greater Vancouver’s data showed that 2,207 homes sold last month. That’s down nine per cent from the same time last year and 14.4 per cent from the 10-year February average.
Detached homes experienced the biggest drop, down 39.4 per cent compared to the average. Townhomes fell 6.8 per cent, while condos rose 5.5 per cent.
“Rising interest rates and stricter mortgage requirements have reduced home buyers’ purchasing power, particularly for those at the entry level of our market,” Jill Oudil, president of the Real Estate Board of Greater Vancouver, said in a statement.
The Office of the Superintendent of Financial Institutions implemented new lending guidelines in January that require borrowers who don’t need mortgage insurance to show they would still be able to make payments if interest rates rise.
Additionally, the Bank of Canada has raised rates three times since the summer of 2017 to the current overnight rate of 1.25 per cent. Such hikes increase the cost of variable-rate mortgages. They have also increased the cost of new fixedrate mortgages as yields on the bond market have moved higher.
“The supply of apartment and townhome properties is unable to meet demand,” Oudil said. “On the other hand, our detached home market is beginning to enter buyers’ market territory.”
The benchmark price for detached homes remained virtually unchanged from January 2018 at $1,602,000 in February. The benchmark price for condos rose 2.6 per cent from January to $682,800 and for townhouses jumped 1.9 per cent to $819,200.
The B.C. government unveiled a housing plan aimed at improving affordability in the real estate market. It raises the foreign buyers’ tax to 20 per cent from 15, and expands it from Metro Vancouver to include the Fraser Valley, Central Okanagan, the Nanaimo Regional District and Greater Victoria.