Last year was an interesting one for the Canadian new and resale housing markets. The introduction of the mandated mortgage stress test set out by the Office of the Superintendent of Financial Institutions (OSFI) had a significant effect, in that both new and resale home sales were down. First-time buyers were especially affected, as most either avoided entering the market or rescinded their offers because they could not pass the test. The stress test requires all people (new and renewal) borrowing from federally regulated lenders such as banks to prove that they can afford future mortgage payments even if interest rates rise substantially. This applies even for mortgages requiring more than a 20 per cent down payment.[Read Me…]
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