As many of you know, in the past the implementation of the "mortgage stress test" had a significant negative impact on the real estate market. The stress test reduced the amount buyers could spend on homes and took some buyers out of the market altogether.
This was just announced today https://www.osfi-bsif.gc.ca/
A few hours ago, the Superintendent of Financial Services (Banking Watchdog) recommended that the Federal Government increase the Mortgage Stress Test from its current 4.79% to 5.25%. This is a proposed change; they have asked for industry input by May 7th with a proposed effective date of June 1, 2021. While it is still not certain this change will be implemented, many in the industry believe the request for input is just a formality and the increase will be in effect by June 1, 2021.
I personally think that a number of other factors will converge by June to significantly slow down the market (making it less seller-friendly and more buyer favourable) even without government involvement. However, if the stress test is modified, we should definitely see a noticeable shift.
As we know, what goes up must come down...stay tuned for the usual end-of-month market update in your mailbox tomorrow and please let me know if you have any questions.