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Would TD Bank’s move ultimately ease the stress test?

TD Bank's recent decision to cut its five-year posted rate might set a very "action-packed" scene for Canada's housing market this spring, an expert said.

In a TV interview with BNN Bloomberg, RateSpy.com founder Robert McLister said TD Bank's move could trigger other big banks to slash their posted rates, a scenario that could result in the easing of the stress test.

If the other big banks follow suit, the Bank of Canada would likely be compelled to lower the benchmark rate to below 5% for the first time since the stress test rules were adopted.

"And that will improve a typical borrower's ability to buy a home by about 2%," McLister said.

With this added boost in borrowing capacity, more buyers would get the confidence to participate in the housing market, heating up the already competitive space.

"The spring market accounts for a disproportionately large percentage of home sales. It's prime time in the mortgage market and this change by TD, if it's matched in short order, is going to make for a more action-packed spring market," McLister said.

McLister said an increase in demand for housing will fuel house-price growth, particularly in popular markets like Toronto, Vancouver, and Montreal.

by Gerv Tacadena Feb 12  2020

 

www.repmag.ca

 

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