The recent government interventions have had the desired impact and have dramatically slowed down sales in the detached housing market of Greater Vancouver. Prices are at various stages of dropping depending on what areas and price range you are in. One of the factors which has not received much debate or converstion is having one of the greatest effects on our market. That is the new "stress" test on clients who have existing mortgages.
Traditionally when a homeowner wanted to buy a new bigger/better home, they borrowed new money and that new money was added and "blended" with the new money and a new blended rate was created. The homeowner needed to qualify at the new blended rate. Now, with the new rules, the entire totality of the mortgage has to be "qualified at 2% above the posted rate not only for the new money, but also for the old money! It is becoming almost impossible for clients to move up in value by any significant amount. This will continue to stiffle our market. Furthermore, there are many clients who have had verbal pre-approvals who are finding they are getting declined after they have presented the financial institution with a valid Purchase Contract. As usual, you need to be properly informed!...we can do that..please call anytime!