A recently toughened stress test is making it more difficult for young people and newcomers to the country to buy homes, Canadian mortgage industry leaders say.
The stress test requirement came into effect in January. Anyone taking out an uninsured mortgage must be able to prove that they could continue to make their payments if their interest rate rose by two per cent, or to two per cent more than the Bank of Canada’s five-year benchmark rate.
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Real estate analysts warned before the change came into effect that the test could push some prospective homebuyers out of the market.
According to the Canadian Real Estate Association, home sale levels hit a three-year low in January, as sale volume saw its biggest month-over-month drop since the 2008 recession. Residential real estate activity remained slow into the spring before rebounding somewhat in the summer.