New mortgage guidelines penalize Winnipeg consumers for errors of larger markets, actual property brokers say

The Winnipeg real estate market shouldn’t have to pay for the problems of Toronto and Vancouver, local real estate agents say.

New rules imposed by the federal government mean as of Monday, Canadians hoping to qualify for a mortgage have to pass a “stress test.” Borrowers now must prove they could afford to pay their mortgages at the big banks’ posted rate for a five-year mortgage, which the Bank of Canada says currently averages 4.64 per cent, in case interest rates to jump.

Geoff Archambault with Century 21 Advanced Realty said some prospective buyers in Winnipeg will be delayed or unable to buy homes they thought were within reach.

Before the changes took effect, Archambault said a couple with an $80,000 annual income and a $20,000 down payment could qualify for a mortgage on a $344,248 home. Now that number is closer to $293,665, he said.

Claude Jolicoeur, who’s been a real estate agent for 22 years with Century 21, said buyers looking at homes in the $300,000-range are going to have to adjust their expectations. They may no longer be able to afford to live in certain neighbourhoods.

Claude Jolicoeur has been a realtor for 22 years and says the new rules are going to make it harder for young families to buy homes in Winnipeg. (CBC)

The shift is designed to cool down the over-inflated markets in places like Vancouver and Toronto, Jolicoeur said, adding smaller markets are getting a raw deal.

“It affects all areas. In Saskatchewan, Manitoba, Ontario, parts of Quebec, [the new buyers are] going to be suffering because it affects them,” he said. “This came very sudden, very short notice. The law was passed three weeks ago and it’s [already] effective.”

While the market isn’t “crazy hot” in Winnipeg according to Archambault, it remains strong and steady, with many homes regularly getting multiple offers before they are sold, he said. The market certainly isn’t hot enough to justify the kinds of restrictive countrywide rules that were created with bigger markets in mind, Archambault said.

There’s a lot of uncertainty, and when there’s uncertainty, that causes a lot of issues.– Geoff Archambault

“It’s not overheated like the government is saying it is. They are doing a one-size-fits-all approach,” he said. “We’re not Toronto and Vancouver here, and we’re really concerned that’s going to hurt our local markets.”

First-time buyers will be among the hardest hit and may have to keep renting or resort to buying property with help from older family members, Jolicoeur said.

Archambault said sellers hoping to trade up are also in for a surprise.

“If someone just sold a house maybe three or four weeks ago before these rules came out, now when they go to get a new house, they probably can only afford the same home that they just sold,” he said.

“They were hoping to upsize and get a bigger home; now they can’t get that bigger home because they have to qualify for a lot higher interest rate.”

Archambault said the rules will make Manitoba more of a buyer’s market in one respect, as concerned sellers may be more likely to take lower offers earlier on in the bidding process than before.

“There’s a lot of uncertainty, and when there’s uncertainty, that causes a lot of issues,” he said.

Archambault’s advice to prospective homeowners is to make sure they keep their credit scores as high as possible and refrain from making any other big purchases for the time being. As for sellers, many will have to confront the unfavourable new conditions by lowering the asking price on homes, he said.

“We’re really going to have to watch how we’re pricing homes now. Things are going to change probably on a monthly basis now. Something might sell this month but next month, if it slows down even more, it might have to go a little bit less and be priced a little more [aggressively].”

Jacqueline Hansen on new federally-mandated mortgage “stress tests” that took effect Monday 2:13

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