Canada's new mortgage stress test level may not slow down P.E.I.'s hot housing market

It's now a bit harder to qualify for a home loan in Canada, but the attempt to cool down home buying may not have much of an effect on P.E.I.'s red-hot market.

Ottawa announced this week thatit raised the level of the "stress test" for mortgages, setting itat 5.25 per cent. That's an increase of abouthalf a percentage point from where it was before, at 4.79 per cent.

This means, for example, that somebody looking to buy a home that was qualified for $300,000, would now qualify for around $285,000.

It's not a huge amount in the difference, said P.E.I. mortgage broker SteveSwyer, but it's big enough to make finding a home more difficult for some people.

"Somebody that was having difficulty before finding a $300,000 homewould find it extremely difficult now because their borrowing power has been lowered," he said.

"This will take some people out of the market for sure, but in a hot market like ours, there's still a lot of people lined up to buy. So I don't think it's going to slow it down much."

He said it's more common now for peopleto getfamily members involved in their mortgage, where they're asking for a parentto co-sign.

"It's not uncommon to have one, two, three people on a mortgage now where as we didn't see that as much in the last five or six years," he said.

"But now it's very common especially for first-time buyers."

'We're down in listings'

P.E.I.Real Estate Association president Wayne Ellis said it's likely young, first-time homebuyers without equity who will have a tougher time.

"Just this little increase is going to have an effect on their ability to borrow, particularly if their load-level of debt is at its maximum now," Ellis said.

Overall, Ellis said the stress test may not be felt as much on the Island, as low supply is the real issue.

"Here, our market, we're down in listings it just creates competition, and I don't think that's going to change with a stress test," he said.

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