in a report<\/a>.<\/p>\nSpecifically, Herrera and Bystrova refer to foreign-homebuyer taxes in Metro Vancouver, BC, and Ontario\u2019s Greater Golden Horseshoe region, which includes the Greater Toronto Area.<\/p>\n
They also cite mortgage stress testing that federal policymakers introduced in January 2018. The rules, drafted by the Office of the Superintendent of Financial Institutions, a financial-sector watchdog, set a higher bar for uninsured-mortgage applicants through a new stress test.<\/p>\n
The test requires these borrowers to qualify at a rate that is either 200 basis points higher than what\u2019s on their contract or matches the Bank of Canada\u2019s qualifying rate \u2014 whichever is higher.<\/p>\n
Similar testing had existed for the insured mortgage (mortgage insurance is required for those who don\u2019t have a downpayment of at least 20 percent) since 2016.<\/p>\n
\u201cReal estate markets continue to adjust to regulatory changes and are now benefitting from a decline in borrowing rates after reaching an eight-year high in late-2018, alongside a tightening spell by the Bank of Canada,\u201d the economists continue.<\/p>\n
Herrera and Bystrova note that the rate of non-bank borrowing exceeded that of banks. However, mortgage credit tied to non banks remains in line with the long-run norm.<\/p>\n
\u201cDespite the faster pace of non-bank borrowing growth, it still occupies less than one quarter of market share,\u201d the economists write, noting non-bank lenders represent 21.3 percent of the mortgage-credit market.<\/p>\n
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