The tightened mortgage rules introduced by the federal government last year are having a negative effect on the homebuying plans of first-time buyers.
That’s the finding of a survey for the Ontario Real Estate Association by Ipsos Reid which says that 79 per cent of first-time buyers will delay buying due to the mortgage stress tests.
“Our survey indicates that the new stress test will have a negative impact on first-time buyers’ ability to buy a home,” says OREA CEO Tim Hudak. “It’s important to remember who’s being affected by measures that curb housing demand – a young family looking for more space, a twenty-something trying to get out of his parent’s basement. Just when they’re about to make the leap into home ownership, things get a little less affordable.”
Hudak says that policy should be focusing on helping affordability rather than curbing borrowing. He welcomed the new provincial land tax rebates for first-time buyers which came into force this month which could be followed by a similar move from the City of Toronto.
“More rebate means more money in the pockets of first-time buyers which benefits both home owners and the province,” says Hudak. “The money that home buyers get back either ends up going towards their mortgage or more often they spend it on furniture, appliances, renovations. The economic spin-off that comes with every home sale is immense. In this regard, the City of Toronto stands more to gain from giving its home buyers more rebate, rather than a tax increase.”
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