New mortgage rules announced this week should have a limited impact on the local real estate market, according to local experts.
The new changes introduced earlier this week reduce the length of amortization available in government insured mortgages.
Where previously the amortization period could be as long as 35 years, that will now be limited to 30 year in order to receive government-backed insurance.
The changes were aimed at driving down the amount of debt Canadians are carrying, which is reaching historic heights.
Roberta Hardern, a mortgage broker and owner of the company Mortgage Success, said the longer amortizations were being used especially with first-time buyers.
“There was a lot of interest with first time buyers who were trying to stretch their dollars.”
The changes are set to take effect on March 18. Hardern said for one of the clients she was working with recently it would mean looking at a different property.
“If she were purchasing this home after the 18th the numbers would no longer work.”
Despite that case, Hardern doesn’t believe there will be a big impact on the overall housing market locally.
“I don’t think it is going to be huge,” she said. “Obviously people will qualify for slightly less so there may be an impact of the prices of going down slightly.”
Jody Jenkins, a local real estate agent with Remax, agreed the impact on the local market will likely be minimal.
He said while there are some first time homebuyers looking in St. Albert, they aren’t a big part of the market.
“There are definitely a lot of first-time home buyers in St. Albert, but it is not a big segment of the home market.”
Jenkins said he doesn’t view the change as significant to the housing market and said it likely reflects the Canadian Mortgage and Housing Corporation being prudent and trying to safeguard people from taking on too much debt.
Ketih Stewart, another local realtor with Sutton Group – Nor Vista Reality, said he also doesn’t see a big change from the new rules.
“I really don’t think it is going to be a big impact.”
Stewart also said the city does have first-time homebuyers in lower price points especially, but not an overwhelming amount.
“There are no more than any other reasonably-sized bedroom city.”
Hardern said if those prices creep down, it is going to be people who financed their home several years ago when the rules were less stringent who have the most reason to be concerned.
“The people who are going to be hurt the worst by this are people who purchased homes back when you could do 40-year amortization and 100 per cent financing.”