During the last 18 months, new Quebec mortgage rules have emerged. The mortgage landscape in Quebec , and Canada in general, has been turned upside down. For good reason, new conditions to meet to obtain a mortgage. But, rising rates have, too, helped to change the game in many ways. CMHC’s recent annual survey allows us to understand the response of households facing this new reality.
Last April, the Canada Mortgage and Housing Corporation conducted an investigation. This survey was aimed at interviewing nearly 4,000 households who took out a mortgage in the previous year.
Rising rates puts pressure
The Bank of Canada has begun raising its key rate in the summer of 2017. This rise in the rent of money has been accompanied by the arrival of stricter rules regarding the mortgage loan. As a result, the vast majority of Canadian households had to go to the maximum of their borrowing capacity to make their real estate purchase (85%).
In addition, they are still 20% to recognize that this new environment has had consequences on their decisions. However, they acted in different ways:
- Reduction of expense items deemed incidental.
- Use of savings to increase the down payment.
- Ambitions revised downward.
These new rules have also affected the demographics of buyers. While 25-34 year olds accounted for 60% of buyers in 2017, their share has fallen more recently to 50%. Newcomers account for 22% of real estate purchases in Canada.
Price, essential criterion
If many factors must be taken into account when considering a real estate purchase , the price is more than ever element number 1. Proof that this new mortgage reality has a definite impact on Quebec households . In fact, the general state of the property, the distance from the place of work or, still, the neighborhood become more and more secondary elements. The fear of higher rates, ever more stringent eligibility rules, are also reasons Canadians are pushing for action. All the same, they are still half to worry about paying too much for their house .
Trust reigns at 76%
Of the panel surveyed by CMHC, 76% of borrowers say they will be able to repay their mortgage . Nearly 60% of them have investments that can offset a concern. Confidence in the long-term value of real estate is high. They are 80% to be convinced of the relevance of such an investment . But in the shorter term, this confidence is only 66%. For good reason, buyers think that the value of their home will rise in 12 months.