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Toronto’s housing market has cooled for seven months, with prices falling and listings surging. The market has begun to buckle under a raft of measures to curb prices that were soaring at a 20 per cent clip a year ago and saddling Canadians with debt, part of a global real-estate boom that’s swept cities from Hong Kong to New York.

The latest move requires that even people with a 20 per cent down payment, who don’t need mortgage insurance, prove that they can make payments at much higher rates. The so-called stress tests, which already exist for insured mortgages, will be calculated at a rate of at least 2 percentage points above the contracted rate.

And those rates are going up. The country’s central bank increased its overnight target rate three times in the past year, to 1.25 per cent. The country’s big banks have followed suit, nudging mortgage rates to a four-year high.

Reality is sinking in as buyers update their pre-approved mortgages at the higher rates, Dawna Borg, a sales representative at Remax Premier Inc., said in an email.

“They seem to feel defeated,” she said. “They feel they will fail the stress tests and they will be forced out of the market.”

Analysts at Macquarie Capital Markets Canada Ltd. say the new stress tests and mortgage-rate hikes in Canada’s environment of “hyper-leveraging” will have a more severe impact than policymakers expect. The rules alone will reduce purchasing power by as much as 17 per cent, the bank said in a report. Add in the mortgage-rate increase and that number jumps to about 23 per cent.