Mortgage rules hit demand

Photo: CTV

The B.C. Real Estate Association says tough mortgage qualification rules are a key reason for a provincewide drop in housing demand last month compared with February 2017.

The association says home sales fell 5.7 per cent in February, with about 6,200 properties changing hands.

Chief economist Cameron Muir says on a seasonally adjusted basis, sales have plummeted more than 26 per cent since new federal mortgage rules took effect at the beginning of the year.

But the association says prices continue to climb, with the average home selling for just over $748,000, an 8.8 per cent jump over February of last year.

The Office of the Superintendent of Financial Institutions implemented new lending guidelines in January that require borrowers who don't need mortgage insurance to show they would still be able to make payments if interest rates rise.

In order to get insurance, homebuyers must prove they can service their uninsured mortgage at a qualifying rate two percentage points higher than the lender's rate or the Bank of Canada's five-year benchmark rate, currently set at 5.14 per cent.