According to the National Post the Federal government, in its efforts to get tough on borrowing, is shining its giant flashlight at the condo market and writing up rules to make it tougher to qualify for a loan on high rise homes.
The government is considering legislation that will add 100% of condominium fees to the expenses measured against income to determine whether a purchaser can afford a mortgage. Currently, banks consider only 50% of condo fees when evaluating a load request.The Post believes the move has the potential to squeeze thousands of consumer out of the market.
In addition to the stricter condo fee rules, the government would also like to reign in lengthy amortization periods and raise minimum down payments; The maximum length of amortizations may be lowered to 30 years from 35 years and minimum down-payments increased from 5% to as much as 10%.
Canada’s building industry is not impressed with the proposals. Stephne Dupuis, chief executive of the Toronto-based Building Industry said, “I’m concerned and disturbed if they are making changes, particularly to condos. They have already imposed stricter rules and that was plenty.”
Toronto based real estate broker and developer Brad Lamb chimed in too with a fiery quote, “All it is a knee jerk reaction by idiot bankers pressuring idiot politicians that don’t understand the nature of the condominium market in Canada. What is driving the condominium market in Ottawa, Vancouver, Toronto and Montreal is investors. This won’t affect them. This just attacks the lowly first-time buyer.”