Canada’s mortgage stress test has been subject to plenty of criticism. However, with rising interest rates, it may be a saving grace for many homeowners. Plus, high- and low-priced real estate listings in London this week
MORTGAGE RATES ARE rising, but thankfully, most of us are prepared. Since 2016, homebuyers securing insured mortgages have had to meet a stress test, whereby lenders had to prove the borrower could withstand the financial burden of rising interest rates on their home loans.
In 2018, that requirement was extended to include virtually all borrowers, even those with 20 per cent or more down payment. Regulators prioritized controlling systemic risk.
The tightened rules that were expanded four years ago not only protect the housing market, but the broader economy as well. Mortgages are the largest assets on the banks balance sheets, so avoiding a housing meltdown staves off broader financial challenges. Our conservative mortgage rules and larger capital buffers forced on the big banks make our financial sector that much stronger when economic calamities are thrust upon us.
As mortgage rates inch upwards, and some homeowners are ‘stressed’ by the rising rates in their variable mortgages, our structural prudence will ensure very few of them are pushed into selling assets they can’t afford. This will help to keep our housing sector relatively stable and fluctuations in pricing will be measured rather than consequential.
On average, our market has only come down about 10 per cent off the high experienced in early March. Average prices still exceed where we were at the beginning of the year.
Historically, London is a bellwether for the province and country ― a stable, conservative place where change is slow. Let us hope London leads the country, modelling our stable system where ‘stress’ was introduced four years ago by a cautious government, and we nail our economic landing.
Address: 103-1176 Hamilton Road
MLS number: 40256828
List price: $179,900
Days on market: 41
Size: 1 bedroom, 1 bathroom, 505 square feet
Listing agent: Scott Vannoord, Sales Representative, Sutton Group Select Realty Inc., Brokerage
Address: 2 Grosvenor Street
MLS number: 40280638
List price: $2,399,900
Days on market: 4
Size: 3 bedrooms, 4 bathrooms, 2,500 square feet
Listing agent: Sam Meddaoui, Sales Representative, and Iman Zabian, Sales Representative, Street City Realty Inc. Brokerage
Address: 170 Mount Pleasant Avenue
MLS number: 40280772
List price: $325,000
Days on market: 1
Size: 3 bedroom, 1 bathroom, 1,369 square feet
Listing agent: Zannah Brown, Sales Representative, Keller WIlliams Lifestyles Realty, Brokerage
Address: 3-157 Windermere Road
MLS number: 40245977
List price: $2,950,000
Days on market: 58
Size: 4 bedrooms, 4 bathrooms, 5,186 square feet
Listing agent: Christine M. Crnich, Sales Representative, Oliver & Associates Real Estate Brokerage Inc.
London South & West
Address: 100-198 Springbank Drive
MLS number: 40255158
List price: $225,000
Days on market: 45
Size: 2 bedroom, 1 bathroom, 1,000 square feet
Listing agent: Karen Greason , Broker, Re/Max Centre City Realty Inc., Brokerage
Address: 3944 Southwinds Drive
MLS number: 40275086
List price: $4,298,000
Days on market: 7
Size: 5 bedrooms, 5 bathrooms, 7,475 square feet
Listing agent: Bradley Gleed, Broker, and Heather Gunn, Broker, Re/Max Hallmark A Team
Disclaimer: London Inc. does not guarantee the accuracy of the statistical data on this page. The data does not represent the listings of any one agent or agency but represents the activity of the real estate community in the area. Any real estate agent’s ad appearing is separate from the statistical data provided, which is in no way a part of their advertisement.