Here are some of the stories that caught our eye this week:
New high-tech waterfront community set to come to Toronto
This week, Waterfront Toronto officially announced it’ll be partnering with Sidewalk Labs, a Google sister company, to build a new tech-focused neighbourhood along Toronto’s Bonnycastle Street and Queens Quay East. The new community is slated to be a place for “tens of thousands of people to live, work, learn and play,” and it will include advanced technology like self-driving public transit and ultra-efficient energy systems.
Prime Minister Justin Trudeau, Ontario Premier Kathleen Wynne, and Toronto mayor John Tory attended the press conference announcing the new neighbourhood on Tuesday. Trudeau said the community will be a “test bed” for new technologies and for creating “smarter, greener, more inclusive cities.” The project will begin with a year of public consultations starting Nov. 1.
Small business tax rate now cut to 9%, in response to backlash from small business owners on proposed tax reforms
On Monday, the federal government announced it will be cutting the small business tax rate from 10.5 per cent to nine per cent by 2019. The move was announced in response to widespread criticism from small business owners over the Liberals’ proposed tax reforms, which were announced this summer.
The drop in the small business tax rate will first lower to 10 per cent on Jan. 1, 2018, and then to nine per cent on Jan. 1, 2019.
The Liberal government also announced it would not be moving forward with its initial plan to limit access to the lifetime capital gains exemption. However, the Liberals will still keep other elements of their plan, including restricting “income sprinkling,” where business owners transfer income to their children or spouses who are taxed at a lower rate.
“The Big Short” fund manager says a housing market correction is in the cards for Canada
You might remember Steve Eisman as one of the fund managers who struck it big in 2008 by betting against collateralized debt obligations right before America’s housing market crash. He was also played by Steve Carrell in the movie The Big Short.
This week, Steve Eisman turned his attention to Canada’s housing market during an interview with Bloomberg Markets, saying that our housing market is heading for a slump in 2018. He pointed to the downturn in sales in Toronto’s housing market as evidence of this cooling, and noted that incoming regulations are likely to be “very negative” for the market as well. However, rest assured, Eisman notes that the scale of this correction won’t be comparable to America’s crash.
OSFI stress test for uninsured borrowers to take effect in January 2018
This week the Office of the Superintendent of Financial Institutions (OSFI) published the final version of its B-20 guidelines which will come into effect on January 1, 2018. The most notable change for mortgage seekers is the requirement that the minimum qualifying rate for uninsured mortgages must be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.
Here’s how these new rules are set to affect housing affordability: How OSFI’s new mortgage rules will affect home affordability.
And here’s how mortgage industry experts expect these changes to impact Canada’s housing market: What housing industry experts are saying about OSFI’s new rules.
Some mortgage industry insiders have already found a possible loophole in these new regulations, pointing out that OSFI has not regulated the length of amortization periods. A longer amortization period could reduce monthly payments at a particular interest rate, and thus qualify more buyers.