KAMLOOPS — It's been a year since the federal government introduced tougher mortgage rules for people purchasing homes with at least 20 per cent down, and the new 'stress test' has had a moderate impact on potential home buyers across the country.
It's been no different in Kamloops where some people have struggled to qualify for a mortgage, while others have been forced to look for less expensive homes.
It was in October 2017 when the federal government wanted to help cool down an out-of-control housing market, especially in Vancouver and Toronto. The new rules came into effect last January, requiring potential home buyers and those renewing their mortgage to go through more stringent screening.
"Those rules were put in place so that when people are renewing five years from when they initiate their term, they're able to afford the increased mortgage payment if interest rates have gone up because we haven't had an increasing rate environment in probably the better part of a decade since 2008," said mortgage broker Travis Colman with Invis.
Interest rates for qualified buyers sits at 3.59 per cent, seeing five slight increases in the past year. Local mortgage broker Travis Colman with Invis says the strict rules have posed challenges for single-income earners.
"I see the impact a lot, particularly in Kamloops, a very blue-collar town, when you have somebody single-income or maybe a mother with a family," noted Colman. "They're relying on child tax benefits and other benefits that go along with their child that is a significant portion of the family income, but a lot of lenders don't recognize that. So it's hitting those people the hardest."
Realtors in Kamloops are seeing the impacts on buyers as well. While sale prices have risen over the last year - with the median price for a single-family home in the family at $465,000 - potential home buyers are having to adjust their expectations on the quality of home they can purchase.
"It reduces people's buying power by about 20 per cent," said President of the Kamloops and District Real Estate Association Doren Quinton. "So if you had qualified for a home in the $500,000 mark, you're now looking at about $400,000."
Quinton says it's pushed more people into the condo market in Kamloops. Builders in the city have been working on more multi-family developments, some of which are too pricey still for people.
"Talking with one of our members who's a builder in that price range, under $400,000, he said a number of people not being able to qualify under the new stress test rules," said President of the Canadian Home Builders' Association Central Interior branch Kelly Reid.
But the consensus among realtors and mortgage brokers in Kamloops is housing prices will remain fairly steady in the coming year, and Colman believes the interest rates won't increase much either.
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