As brilliantly pointed by UrbanDwelling.com, many are saying that the mortgage rules will not have a significant impact on RE because most people are not borrowing up the maximum amount they are qualified for. The latest numbers shared with BetterDwelling by the Bank Of Canada (BOC) suggest that indeed there may be a significant problem. As can be seen from the figure below, there is a significant spike at 80% LTV and 95% LTV, meaning, the buyers put down 20% and 5% respectively. The good news is that: the number of 95% and 90% LTV ratio mortgages have dropped and have been reditributed to the 80% and below LTV area plus a $21 Billion reduction in buying activity.
The data suggests that 40% of borrowers pushed their maximum limit to buy a home. This statistic by itself is worrying, but paired with its statistical implicaitons, become downright scary. If 40% of borrowers pushed their personal limit, housing continues to get more expernsive or stabalizing, and the new mortgage stress tests will reduce buying power by 20%, where will all the buyers go?