Quote:
Originally Posted by MarkyMark
Although if you can't afford a 2% hike in interest rates should you have bought the place to begin with?
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Interest rates don't go up 2% overnight. The majority of first time buyers get 5-year fixed rate mortgages anyway, so the impact of an interest rate increase is only felt when their mortgage comes up for renewal. And 5 years is a long time for people to increase their incomes or learn how to live with less.
Prices for starter homes, such as strata condos and townhouses, have not come down. But, people who want to buy in because they are sick of renting or want the stability of ownership because they are starting families, have had their ability to qualify for mortgages reduced. It's not about whether they can afford to stomach a 2% increase 2 years from now, it's about what they can afford to buy today or 2 months from now.
From a macroeconomic perspective, it's probably a good thing that these stress tests have been introduced. But for the first time homeowner who has 10-15% down and is ready to buy, its more challenging today.