Everyone thought that when the new mortgage rules were announced all eyes would be on Toronto. But even if that’s true, there’s some concern out West, and it’s in regards to Calgary mortgages. Here, some buyers may get priced out of the market. Luckily, it seems their economy can handle it.
Ann-Marie Lurie, senior economist with the Calgary Real Estate Board, says that the new rules could leave some people out of the market, as people can no longer afford an insured mortgage once the 25-year amortization periods are put into effect. “You would expect to see some of the demand cool,” she said. “We’ve had a really strong sales demand this year. So even if it’s cooling, it’s not going to be a total reverse of what we’ve seen. It will impact demand as you’re pricing people out of the market. Another thing you’ll see is what people can afford will also change. We can expect this to have some sort of dampening impact on price growth as well. The single-family market has been fairly tight and prices have actually been increasing a little higher than expectations. This will actually bring it more in line for what we did expect originally for the year.”
Todd Hirsch, senior economist with ATB Financial, also thinks that change is on the way; but he doesn’t believe that the changes will bring a huge impact to the Calgary market. “It will be directed at that segment that the Bank of Canada is most worried about and that is probably first-time homebuyers who might be tempted to get in over their heads with too much mortgage debt,” he said. “So I don’t expect it to have a big, big negative impact but it will affect those buyers who perhaps have to wait a little bit longer to cobble together some down payment.”
But the news isn’t that bad – not for Calgary, at least. Ben Brunnen, chief economist at the Calgary Chamber of Commerce said it’s Calgary’s economy that allows them to absorb the new rules without too much impact on homeowners and homebuyers in the province. “We’re fortunate to be in a position of growth,” he says. “And when that reduce access to financing come into play you want to be in a place where the growth is happening as opposed to an area of decline. In Alberta right now, we’re also seeing relatively high consumer confidence and relatively strong spending. So when we see those things, we need to make sure that consumers don’t over-leverage themselves in the event the economy declines globally.”
So Calgary’s set to handle the changes. But what about the other markets Mr. Flaherty was so concerned about? What impact do you think the changes will make to Toronto mortgages, and the housing market there?