Toronto Mortgage & Real Estate Update – 2022 February

The market in the GTA and Toronto continues to show above average levels of price increases and low inventory, causing buyers to encounter multiple offer situations.  Prices are now well above the average in 2017 when there was a spike before the foreign buyer tax was introduced and the mortgage stress test was put in place. Several media outlets and analysts are now predicting a government intervention will be coming soon to slow down the market.  There are many properties selling for 50% higher prices than in 2020, some even over 70% .

Possible new measures may include the following:

– A new tax on speculators who sell homes in a short time period, also known as “flippers”

– An increased empty home tax to get more properties onto the market

– A new mortgage borrowing rule regarding home equity lines of credit where the regulator OSFI will ban purchases of rental / investment properties using borrowed funds

– Potential to change the mortgage qualifying stress test has also been mentioned but not on the radar as significantly as the above points

Several mortgage brokers in Toronto  and real estate agents have expressed frustration with the government not acting on the very hot real estate market in Toronto and the GTA. They have indicated that the higher prices in such a short time period will cause a much more dangerous credit event in the future once rates start to rise this year and through 2024 as predicted by many analysts.  Payments for borrowers will swell significantly as the mortgages taken out now are at record amounts while rates increase steadily.

Speaking of rates,  it is still a great time to refinance a mortgage at these low rates, especially variable mortgage rates around 1.5% currently, many borrowers are choosing to do so now rather than wait.  A mortgage refinance can be a great way to lower overall high interest debt levels and consolidate payments. Contact us today for a quote.

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