It’s been one week since the new mortgage rules were announced by the Feds. Anyone looking to purchase a home with less than 20% down now faces an uphill battle when evaluating inventory and what they can really afford (according to the powers that be). For more context on what those changes were and why they were deemed necessary, please read this article courtesy of the Edmonton Journal.
As the article states, the new rules may adversely affect one segment of the market that had been performing fairly well over the past several months. New home buyers were taking the “buyer’s market” mantra to heart and actively looking to capitalize on their perceived buying power. Enter these new rules and this emoticon (🙃 ) seems to summarize the situation best.
One of our preferred Mortgage Specialists, Michelle Lapierre, has a quick read about the impact to purchasing power at different income levels. You can see that the decrease in budget is not an insignificant one. With 18 – 20% reductions in home buying budget, as illustrated by her examples, your shopping list is bound to change should you be affected by the new rules.
What does this mean for clients on both sides of the fence?
For buyers, it’s imperative that you understand if your purchasing power has changed. Contact your mortgage broker immediately to see if what you qualify for is indeed going to be the same after October 17.
If you’d been teetering on the edge about making a purchase, this may just be the push you need to make a decision. Don’t do it without a well-informed opinion from a real estate professional. What you purchase now will impact what you sell later.
For sellers, your target market may be impacted by these changes as well. Properties under the $300,000 mark, or typically homes that have a “first-buyer” appeal may benefit significantly from these changes. However, should you be testing the market with an aggressive pricing strategy, you may wish to reconsider your approach in order to address the tighter-wallets issue.
The market will continue to purchase and sell property despite the new rules; that’s a given. Ensuring you fully understand how these rules impact you is why you should be surrounding yourself with skilled professionals. If you have questions, we can help you get answers. We just can’t help you get 20% down.
Need a line to a great mortgage specialist? We’d be happy to help by providing a referral from our COMMUNITY Connects database. These professionals have been used by our clients in the past – their commitment to service is one we respect and feel represents our commitment to our own clients.