On everyone’s mind
On everyone’s mind
Canada's affordable housing crisis is very much on everyone's mind these days. Is our government taking sufficient measures to tackle this pressing problem? Great question.
Fred and Martin believe it is crucial in this week's blog to reemphasize the recommendations put forth by our association, Mortgage Professionals Canada, aimed at making a positive impact. These are:
Illustrating this, Matt Grillo, a Video Journalist with CTV News Montreal, interviewed Fred this week regarding the Canadian Mortgage and Housing Corporation's release of housing starts for the first half of 2023. During the interview, Fred pointed out, "I encounter many individuals in need of assistance to purchase a home”. Pichette also believes that now is the opportune moment to eliminate the mortgage stress test.
Pichette commented, "Given interest rates exceeding 6 percent, it's arguable that we no longer require the stress test. I acknowledge the rationale behind implementing a stress test when interest rates were at 2 or 3 percent – put in place to safeguard both financial institutions, and Canadians from escalating debt."
Requiring potential buyers to qualify at an interest rate of 6% plus an additional 2% for the "stress test" is creating a significant obstacle for everyday individuals trying to secure a mortgage.
Adding to the challenge, "housing starts plummeted by nearly 60%, further complicating the efforts to attain the required number of starts to restore affordability in the Montreal real estate market."
In the first half of 2023, housing starts dropped by almost 60% when contrasted with the corresponding period in 2022, marking the most sluggish half-year performance in 26 years. Although rental housing remains the primary focus, only 3,500 units were initiated. Further compounding the shortage.
Homebuilders are grappling with difficult circumstances brought about by stricter borrowing conditions, increased construction and labor expenses, and the presence of high interest rates.
This outcome exacerbates the challenge of achieving the necessary number of housing starts required to reestablish affordability in the Montreal real estate market. This is particularly concerning as the most significant decline occurred in the rental housing sector, which had already experienced a reduction in its vacancy rate in 2022.
The decrease in housing starts in Montreal is a direct reflection of the recent deterioration in economic conditions. All these factors combined, makes for a perfect storm.
If you're facing challenges in securing a mortgage and would like us to review your application, please don't hesitate to get in touch with us at Fred and Martin Mortgages. We are more than willing to meet with you to explore all the potential options at our disposal. The best part is, it’s free and could save you thousands of dollars.
Fred and Martin