The changes to insured mortgages that Ottawa put in place as of July have had quite an impact on Canada’s housing market. And while these changes were meant to make a difference, they’ve forced more than a few homeowners to make some very hard choices. One of those choices, says Stu Niebergall, executive director of the Regina & Region Home Builders’ Association, is whether they should sacrifice square footage, or features such as hardwood floors and double sinks.
Mr. Niebergall says that it’s the new mortgage rules that are forcing the choices; and he gives some actual numbers to back that up.
Reducing the amortization period on a $300,000 mortgage from 30 years to 25 adds about $180 a month to a homeowner’s mortgage payment. And that adds up to a whopping $2,160 a year. Almost $200 a month is a lot; and in Toronto that’s a property that’s in the lower price range. Meaning that it could be even more expensive for many homeowners. And that means that they’ll have to sacrifice some things in order to get the house that they want. And what those things are might surprise some.
“People for the most part aren’t prepared to give up amenities; they’d rather give up square footage,” says Mr. Niebergall.
The National Association of Home Builders agrees, saying that when it comes to a bigger home or granite counter tops, most will choose counter tops every time.
Mr. Niebergall puts this back on the new mortgage rules, saying that they are the reason homeowners need to make this choice.
“Our biggest concern,” he says, “is that the mortgage rule changes take away the payment flexibility that’s needed by many young homebuyers. That’s the sector of the market that is being most affected by this. I’m disappointed to see that such a broad-based measure has been taken by the government, instead of using more precise strategies.”
There’s no doubt that the new mortgage rules definitely are having an effect on homeowners and the choices they make. But let’s remember that these choices will only be forced by the new mortgage rules if homeowners should have less than a 20 per cent down payment and require mortgage insurance. If they do have the full down payment, the changes most likely won’t affect them at all.
So, what’s the number one amenity that people are looking for when buying a home? Surprisingly, it’s not hardwood floors, double sinks, or granite counter tops. It’s windows! More people say that they want natural light above anything else. And they’re even willing to give up a dishwasher in order to get it!
When faced with a money crunch, what would you sacrifice in a home? Would it be space or services? Let us know by commenting in the section below or, Like us on Facebook. You can let us know your thoughts there, and you can catch a lot of other interesting financial and real estate news, too!
