Rule changes have as much to do with interest rates as mortgage debt
The rising value of real estate has created a “wealth effect”, inciting consumers, who feel richer than they are, to take on debt to buy the goods and services they want.
Wait, Canadians have been overspending? When did that happen? Why haven't we heard about this, oh, say, last year, maybe?
Consumers maxed out, housing tapped out
There are two overriding themes behind the latest moves and comments by and from policy makers and economists: Consumers are maxed out, and the real estate market is tapped out.
Tighter mortgage rules will hit B.C. the hardest
The new rules will disproportionately affect first-time homebuyers and people who live in B.C., home to the country’s highest housing prices, said Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate.
“The sense is, there are more first-time buyers in the Lower Mainland who have been using the 35-year mortgage,” he said in a phone interview. “Either those people have to come up with a slightly higher down payment, or they just can’t bid the same price on a house.”
I can't wait until the press claims they were out ahead of the decline before it happened.