New Canada housing mortgage rules cause decline in home sales
Canada, 27th June: There has been a down slide in the home sales in Canada following new stricter mortgage rules.
The official figures reveal a record fall of 9.5 percent in the Canada home resales in the period of May from the previous month.
The Canada housing market has been witnessing a record level of activity and there have been significant decrease in Ottawa, Toronto and Vancouver in the month of April, states Canadian Real Estate Association.
The best period for Canada house sales has been February 2007 when total sales were recorded to be 45,266.
As per the figures made available, as compared to the sales of 41,502 in the month of April 2010, total sales recorded were 37,576 seasonally adjusted.
On the national level, sales declined by 4.3 percent(unadjusted) in the month of May as compared to those in the previous year. Moreover, fall in new listings at 76,201 was recorded to be 4 percent in the month of May 2010.
Due to stricter Canada housing mortgage rules introduced by the Canadian government with effect from April 2010 onwards, new house buyers will now need to have higher standards of eligibility for getting mortgage for new houses in Canada.
The rules are also applicable for those going for variable rates of mortgage because now, they will be required to pass through rules of fixed-rate mortgage of five year period.
Apart from putting a cap on the upper limits of money to be borrowed by people for buying new homes in Canada, Canada government aims to curb the growing menace of overburdened home buyers under heavy debt, stated Jim Flaherty, Canadian Finance Minister.
Moreover, the new tougher Canada housing mortgage norms want to bring stability in the Canadian housing market, added Flaherty.
Interest rate was raised from 0.25 percent to 0.5 percent by the Bank of Canada in the first week of June 2010.
Canada housing market can look forward to stability in home prices along with a balance in the market, Georges Pahud, president of CREA( Canada Real Estate Association) stated.
Meanwhile, there was an increase in the average prices of houses throughout the country by 8.5 percent in the month of May, the agency maintained, although, this hike was less than the monthly increases in the last year.