Stress tests push 1 in 3 homebuyers to give up: poll

TORONTO Tougher mortgage stress testing rules are pushing some homebuyers to lower their expectations for a new home and others to opt out of buying altogether.

In a sign of the ongoing role government intervention is playing in the market, one in three Canadian homebuyers said they had decided to forgo a home purchase in light of the new mortgage qualification rules that came into effect January 1, according to a new Re/Max survey conducted by Leger.

A quarter of buyers compromised on the size of their home, while 18 per cent made concessions on its location.

“It has definitely cut out the buying power of first time home buyers and prompted other consumers to rethink where and what they’re going to buy,” said Christopher Alexander, executive vicepresident and regional director for Re/Max. “If you could afford a house at a certain price point and that became unattainable in the last 18 months, you’re probably looking at a condo. If you still want a house maybe you have to consider a different area.”

The new mortgage lending rules introduced by the Office of Superintendent of Financial Institutions require home buyers to prove that they can service their uninsured mortgage at the contractual rate plus two percentage points or the five-year benchmark rate published by the Bank of Canada.