Another reason the changes were implemented was to prevent foreign investors from buying up property in order to sell it at higher, unaffordable prices. But according to Syndicate Mortgages Inc. CEO Markus Arkan, the new policies are harming Canadian residents rather than foreign investors, limiting citizens’ chances of upgrading their living conditions and improving their credit ratings. The government believes the changes to the mortgage rules will leave at least 5 percent of potential homebuyers unable to meet the new requirements.
“With no other option left, they either acquire unsecured credit at interest rates ranging from 10 percent to 18 percent, consequently damaging their credit ratings or they would be forced to lease a home for a certain period of time until they regain sufficient financial stability to buy a house.”
Arkan suggests there will be a trickle-down effect from these changes that will severely hamper both the housing market and the whole Canadian economy. With home prices over-inflated especially in
Arkan believes that the government must research how their intervention in the market will affect Canadians first before foreign investors. The Bank of Canada has signaled household debt as the number one domestic threat to Canada’s economic growth and policies that will only make that threat worse is the last thing the country needs in these difficult times.