How much interest will you qualify for vs. how much you pay?
Cities have been wrestling with affordable housing issues while home owners see their equity rise & Buyers new to the market work to find a suitable home within their budget. This was made a little more difficult earlier in the year when the government imposed a ‘stress test’ for Buyers purchasing with less then 20% down on a home. They are required to qualify at a rate higher then they would ultimately be paying for the mortgage through the lender.
Currently, further restrictions are being considered to apply the ‘stress test’ to conventional or non-insured mortgages. This will affect the budgets of almost all buyers & potentially drive segments of buyers lower into already heated price brackets. This may even increase competition for more affordable segments. This is another example that proves the rule, ‘Cash is King’.
If this further tightening of lending rules negatively affects house values, buyers with cash or investors that can draw from their current home’s equity will have the upper hand in investment property purchase & who could blame them… I don’t imagine the rent in those homes or suites will go down anytime soon.
