Federal Finance Minister Bill Morneau has announced that new measures will be taken to help stabilize Canada's housing market, particularly in areas such as Vancouver and Toronto.
Among them will be the closure of a loophole in which foreign residents avoided paying capital gains tax on investment homes. The government plans to enforce this by only giving individuals who used their home as their principle residence an exemption from this tax.
"We need to have the beneficial owner of the home being here in Canada, we have to have that owner living in the home as their principal residence" said Morneau.
Families can also only designate one property as their principal residence in any given year.
Additionally, Morneau said that the government would also be forcing mortgage lenders to apply a more stringent mortgage stress test to all insured mortgages, starting Oct 17th. This is aimed at preventing would-be buyers from taking on mortgages they wouldn't be able to afford should the interest rate increase or their income decline.
"Many middle-class families looking to buy their first home see prices climbing, often out of their reach. Some are taking on high levels of debt in a rush to buy before it's too late", Morneau said.
"What we're doing today is we are making sure that Canadians take on mortgages that they can afford."
Existing mortgages will not have to undergo the new stress test.
Do you think that existing mortgages should be re-evaluated under the new stress test?