HOW LONG WILL THE EFFECTS OF THE NEW MORTGAGE QUALIFICATION RULES LAST?2018-03-15 11:23:34 Posted By Amir Hamzehali
It seems the government has been quite successful in achieving its goal of controlling the housing market by tempering the housing demand.
According to the British Columbia Real Estate Association (BCREA), sales have dropped by more than 26 percent in our province on a seasonally adjusted basis since the new rules came into effect. The last mortgage policy tightening along with the foreign buyer tax implementation in 2016 negatively impacted the housing demand for a period of four to seven months.
This time the new mortgage restrictions are affecting a larger sector of the market with a vaster magnitude, and its negative effects on the housing demand are expected to last longer. It’s quite difficult to predict the duration of the negative effects of these restrictions on the housing demand. Many factors such an increase in housing affordability, if the prices start to decline, can reverse this trend and bring up the housing activity again.
What we should remember is that what we are experiencing in the market today, merely is a restriction on housing demand and not a decline in people’s desire of home ownership. The housing market works like a spring. The harder you press it down the higher it will jump up when the force is removed!