Credit rating agency Fitch predicts that a combination of Government policies and historically high house prices will push Canada’s mortgage market to its weakest growth levels in four decades in 2020.
House prices nationwide are expected to grow at just one per cent in the next two years, but adjusted for inflation, prices will actually fall.
This time, Fitch predicts it won’t take anything near record-high mortgage rates to push the market into a slump.
The mortgage stress test ― which requires home buyers to qualify for a mortgage at a rate two percentage points higher than the one being offered ― means “people have to save longer for a down payment. Meanwhile, prices just keep going up and up.
With household debt levels near record highs in Canada, many consumers have little breathing room for additional expenses or an increase in interest rates. Canadians now typically spend 15 per cent of their take-home pay on debt payments, the largest share on record.
However, in the long run, Fitch sees strong fundamentals holding up Canada’s housing markets.
“There is high demand for housing (thanks to a) push for One thing is immigrants who tend to buy homes soon after arriving.
The length of time needed to build housing in Canada has grown because of increasingly tough approval processes.
Additionally, “supply issues” ― such as limited availability of residential zoned land around Toronto and Vancouver is expected to keep housing costs high. -CINEWS