It has been almost 2 months since the new down payment policy has been implemented in Canada. Is this new rule a big deal or not?
Huffington Post reports that anyone who plans to purchase more than a $500,000 home in Canada with a 5% down payment nowadays will have to find another alternative. The changes in the rules that are intended to arrest housing market risks will be made effective on February 15 for mortgages that are backed by the government. Supporting long-term stability and reducing taxpayers' exposure are also part of the goals that will be covered by the changes.
This was announced by the Federal Finance Minister Bill Morneau last December for homes that ranged from $500,000 to $1 million. Another is the increase of down payment from 5% to 10% only for newly insured mortgages. First time home buyers will not be affected if they plan to purchase a home less than $500,000.
The president of CanWise Financial, James Laird, believes that the changes will only affect a small percentage of buyers. They can opt to purchase right away but probably for a smaller home instead or otherwise save up for the extra down payment required of them.
OPP Today adds that a minimum of 7.5% will affect the domestic market but not so overseas buyers according to founder of RateSpy.com, Rob McLister. This is because the latter always have to pitch in more cash which will reach to about 20% to 35%. These rates have encouraged overseas home buyers to invest in Canada due to the increase in interest rates in the U.S.
The Mortgage Professionals Canada research results showed that more than 115,000 current buyers might not make the 10% down payment. Bill Morneau, Minister of Finance, might get a recommendation from the Department of Finance because of this. However, Morneau might still stand alongside the senior policy-makers who may be concerned about the housing market in Ottawa.
The real estate market in Toronto and Vancouver are most likely the two areas that will attract the most buyers according to McLister. It will also be in these areas that will hold a tight supply in homes and future home investment as well as a strong migration.
What do you think about the new rules implemented for the real estate in Canada?
