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WALKER: New mortgage stress test rules have been a positive

Mark Walker is a real estate agent and the broker/owner of Kelowna’s Walker Real Estate.
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June 16, 2018 - 12:00 PM

 


OPINION


Last time out, I wrote about how the Kelowna real estate market is starting to feel the impact of governmental changes.

However, while I haven’t been a champion of all the changes introduced in recent years, I do want to cautiously celebrate the new(ish) mortgage stress test rules. Looking at the stats from the Bank of Canada, I believe these rules have been a good thing.

For example, thanks to the new rules, high-ratio mortgages to borrowers who are considered heavily indebted have fallen 54%. High-ratio mortgages are those going to folks who put less than 20% down to purchase. If you’re already heavily indebted and you add a mortgage to that mix combined with rising interest rates, that could be financially disastrous.

Real estate can be a fantastic investment and a vehicle for generating wealth, but you need to be smart about the approach. I realize some of the rules can be frustrating if you’re looking in from the outside hoping to get on the property ladder.

However, the job of regulatory oversight is to protect people and in my opinion, the mortgage stress test rules from the Bank of Canada have generally done that.

Sometimes folks need to be protected from themselves. For example, I know that buyers are often tempted to buy as much house as possible. For instance, let’s say they’re pre-approved for $700K, they tend to want to buy a home close to that price point.

What I strive to do is help buyers get into a home that is appropriate for their needs. They may not need to max their mortgage to the pre-approval amount to get the property that truly suits them.

When considering mortgage payments in the current climate, I also advise adding a couple of percentage points to your current rate, so you can get a feel of where things might be if interest rates continue to climb.

When it comes to purchasing property, especially in a market like this, you should work with a knowledgeable real estate professional who has a fiduciary responsibility to put your needs first.

If you have any questions about the Kelowna real estate market, please contact me at the Walker Real Estate office - 250-764-4344. I would love to chat!

—Mark Walker is a real estate agent and the broker/owner of Kelowna’s Walker Real Estate. His company runs the website KelownaProperties.com - Kelowna’s most comprehensive real estate search tool - and KelownaCondos - your source for all you need to know about condos in Kelowna.


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