Less than 30 days out, mortgage updates spark cautious optimism

• Mortgage rule updates are approaching, and brokers are cautiously optimistic about their impact on the market
• Despite the changes, high borrowing costs and limited housing supply remain significant challenges for first-time buyers
• The $1-1.5 million market segment is expected to see more activity, but high interest rates are still a barrier for some buyers
• Supply shortages in urban centers like Vancouver keep prices high, making affordability a persistent issue despite policy changes

Coming soon: With the mortgage rule updates now less than a month away, brokers are feeling cautiously optimistic. The exact effect on the market (particularly high-cost market) won't be known until the changes hit, but positive anticipation is building.

"Buyers are anticipating the changes, but the current landscape remains challenging," says Damon Steele, the Director of Partnerships and mortgage broker at Pilot Mortgage Group. Pilot is an innovative tech-forward company that prides itself on not being associated with any specific bank or lender, and has funded more than $2 billion in mortgages. "The biggest challenge right now is that, while interest rates are forecasted to come down, they are still restrictive both in terms of cost and qualification," Steel says.

First-timers: Updated rules unfortunately aren't a solve for everyone. In high-value markets, many first-time buyers are finding it difficult to meet qualification standards. Steele says that even though the extended amortizations will help reduce monthly payments, the high borrowing costs and limited housing supply remain significant hurdles for those trying to enter the market.

"It’s important to note that because these changes aren’t effective until December 15, most of the current activity is in anticipation of what's to come," according to Steele. "Buyers are still cautious, especially with interest rates being elevated at the moment. They are holding off, waiting for both the policy shift and the expected rate cuts that will make homeownership more affordable."

Up-market movement: The policies are most impactful $1-1.5 million market segment, where buyers are expected to see more activity as borrowers leverage the bigger price cap and extended amortizations. But current interest rates are still holding some buyers back, as borrowing costs remain relatively high. For his part, Steele see more cautious behavior in terms of closing velocity. "There is anticipation that once rates start to decline and these policy changes take effect, we’ll see an acceleration in demand and transaction speed."

What to look out for: Supply is still the sticking point, and high-demand urban centers like Vancouver simply lack the numbers to support demand. "This imbalance between supply and demand is what keeps prices elevated and affordability out of reach for many buyers," says Steele. So while the policy changes will provide financial relief and make it easier for buyers to qualify for mortgages, they don’t address the underlying issue of limited stock. "Until we see more homes being built - especially in the affordable and mid-range price points, the market will continue to face pressure... and it will require a long-term solution to create sustained affordability in the market."