Canada Implements New Mortgage Rules

Canada's new mortgage rule took effect on Monday, Feb. 15, with homebuyers now required to shell out 10 percent down payment for a home worth more than $500,000.

According to The Hamilton Spectator, with the new federal rule, buyers of homes between $500,000 and $1 million will need to give 10 percent down payment. Meanwhile, buyers of homes less than $500,000 can still pay 5 percent down, and 20 percent down payment for properties over $1 million.

Real estate experts have mixed views on the new mortgage rules. When it was announced in December by Finance Minister Bill Morneau, some observers predicted a surge in sales with the assumptions that buyers will try to beat the implementation of the new rule.

True enough, Royal LePage president and CEO Phil Soper saw a strong market performance in Ontario and Quebec in January up to the first week of February, but he said it's unlikely because of the new mortgage rules.

"I think it has much more to do with clean sidewalks from a mild winter and low mortgage rates than it does with impending changes that tweak mortgage insurance regulations," Soper said. "It's just not a big enough change to have materially impacted home sales volumes in the country."

Some experts meanwhile say that the changes put pressure to first-time homebuyers who now have to save up for a bigger down to acquire a house.

"Coming up with $3,000 or $5,000 or $7,000 more for a down payment to get in there for the first time is a lot of money for first-time buyers," Toronto real estate agent Sonya Côté said via CBC News.

On the contrary, Rob McLister, a mortgage trends expert at CanadianMortgageTrends.com said, as per another CBC News report, that this new regulation will not prevent buyers. "What this will do is just defer buying, it's not going to kill buying," he said.

McLister noted that most buyers actually put at least 7.5 percent down payment for houses over $500,000. "If you can't save an extra 2 and a half per cent on a million dollar property, then most likely you probably shouldn't be buying that house," he said.