Photo by Onny Carr
The Canadian Real Estate Association (CREA) expects gains in house prices to “recede” in April as tighter mortgage terms discourage some potential buyers from entering an already softening market.
Getting over the hurdle
According to a release, the national average price for houses rose 8.8 per cent year-over-year to $365,192 in February. The price has been dragged higher nationally and in British Columbia recently by a record-breaking number of multi-million dollar sales in Greater Vancouver.
“When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent,” said Gregory Klump, CREA’s Chief Economist. While the figures are still higher than in the past six months, national average gains are very likely to decrease after new measures by the Finance Department concerning tightening mortgage rules come into effect in March.
New mortgage regulations introduced by the Federal government will shorten the maximum payback period to 30 years, resulting in somewhat higher monthly payments than with the 35-year amortization that is currently chosen by about one third of home buyers.
The new rules will increase the regular payment on a $300,000 mortgage at four per cent interest by $105, but since it is repaid five years sooner, the regulations will also cut total interest paid by $42,288 over the life of a mortgage.
