The Globe and Mail reports in its Thursday, April 25, edition that the federal government's mortgage stress-test rules are responsible for only a small part of the drop in home sales in Canada in the past two years, says a Bank of Canada study.
The Globe's Janet McFarland writes that the BOC's latest research argues most of the drop was due to "deteriorating affordability" and a "dissipation of the froth" in major markets in Ontario and British Columbia.
"The direct impact of recent mortgage rule changes, in contrast, is estimated to be relatively small," the study concludes.
Mortgage Professionals Canada and the Canadian Home Builders' Association have previously released research suggesting two new mortgage qualification rules have led to a steep drop in home sales in the past two years.
Last week, Canadian Imperial Bank of Commerce economist Benjamin Tal said the mortgage stress test was the biggest factor behind an 8-per-cent drop in new mortgage borrowing last year.
The BOC's report, however, offers an alternative conclusion, suggesting an unsustainable bubble burst in Canada's most expensive markets and the resulting fallout has been the main factor in declining home sales.
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