Mortgage Rules Could Leave Millennials Hanging!
Purchasing power" describes a consumer's ability to buy goods and services. In this case, it means the amount they can borrow to buy a home.
Such a household can currently buy a $505,000 home with a five per cent down payment.
But that wouldn't be possible under the new rules because of a "stress test" requiring all insured mortgages, which have down payments of less than 20 per cent, to be qualified at higher rates, the BCREA said.
This hypothetical family could only buy a $405,000 property under the new rules — $100,000, or 20 per cent less than what they could have had before.
The purchasing power of mostly young buyers is going to be reduced significantly.
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