Although it’s not yet been confirmed, it is best advised that most of the major mortgage lenders in Canada should hold tight and prepare themselves for any extreme drop in the price of properties. The banks in Canada were instructed by the Office of the Superintendent of Financial Institutions that they should conduct an anxiety test for half a percent of the fall in home prices in the Vancouver area, and a 40 percent decrease in Toronto.
A large number of market analysts have recommended a change in the properties price of the country’s two hottest markets. Figures that were disclosed by OSFI seemed to be very high, which is outrageous, although aimed at making sure that banks will still be able to take a stand against correction.
Benjamin Reitzes who is a chief economist was reported as saying “For the markets to face a plummet in prices to those degrees would mean some significant economic issues in play which are unlikely, as BMO Capital Markets.”
In order for the home prices to decrease, the interest rate will have to experience an excessive jump or a very important downturn, which at the moment seems to be impossible and not likely to happen in the near future for Vancouver.