Forget rent-to-own condos – what’s really needed to improve housing affordability?
And some commentators say the housing crisis won’t be resolved without a laser focus on the main problem: the fact that eyewatering home prices are making it almost impossible for many buyers to put together the money needed.
That’s particularly true in markets like Toronto and Vancouver, where average prices remain well above what many buyers – particularly those purchasing for the first time – can afford.
“The average first-time homebuyer I’m talking to, their biggest struggle is one of two things,” Alex McFadyen (pictured top), founder of Flow Mortgage Co. in BC, told Canadian Mortgage Professional. “Qualifying for the amount of income required for the value of the home, and acquiring a sufficient downpayment.”
Is it time for changes to the stress test?
McFadyen pointed to Canada’s mortgage stress test as the first aspect of the current market that could warrant review.
That rule requires homebuyers to prove that they can afford mortgage payments of at least 5.25% or two percentage points above their agreed contract rate, whichever is higher.
