The government of Canada has just announced the change to the minimum down payment for home buyers in Canada.
As of Feb 15, 2016 all homes purchased at $500,000 or more will require a minimum of 10% down payment.
Homes purchased less than $500,000 will not be affected (minimum down payment will remain 5%). The down payment increase will change when the price is above $500,000, but only on the balance above $500,000
The Banks and the Governments would like to raise interest rates to cool the housing market, but their hands are tied by the economy. So they have decided to tighten mortgage rules.
This rule change should not affect the first time home buyer, but more likely to affect the move up buyer.
Pasted below is the news story.
December 11, 2015 – Ottawa, Ontario – Department of Finance
Finance Minister Bill Morneau today announced changes to the rules for government-backed mortgage insurance to contain risks in the housing market, reduce taxpayer exposure and support long-term stability. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from 5 per cent to 10 per cent for the portion of the house price above $500,000. The 5 per cent minimum down payment for properties up to $500,000 remains unchanged.
Today’s announcement represents a graduated approach to increasing the down payment requirement proportionally to the cost of a home. Canadians who already hold mortgages will not be affected by this announcement.
The Government continuously monitors the housing market and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. Higher homeowner equity plays a key role in maintaining a stable and secure housing market.
In making this announcement, Minister Morneau also highlighted the increases in guarantee fees for Canada Mortgage and Housing Corporation (CMHC)-sponsored securitization programs, announced today by CMHC. The Office of the Superintendent of Financial Institutions has also announced today its plans to update regulatory capital requirements for residential mortgages to ensure that capital requirements keep pace with market developments and risks. Taken together, today’s actions will strengthen the resiliency of Canada’s housing finance system to promote long-term stability and balanced economic growth.
David Giovanniello is the Author of the book: "The Warren Buffett Approach to Sell Real Estate and also Founder & Host of North London Advice Givers™ Podcast and Editor-in-Chief of North London Advice Givers™ Magazine—a monthly print-publication, featuring London experts, entrepreneurs and thought-leaders. He is also, CEO of North London's Teacher Only Program® and is a licensed real estate agent with Century 21 First Canadian Corp. Brokerage. David has been called "provocative and entertaining," but also, "a committed philanthropist." He is praised for his Mission to raise/donate over $10,000 to local and Teacher-related charities each year. David also supports many great national charities too, such as: United Way London & Middlesex, Muscular Dystrophy, Canadian Red Cross, MADD: Mothers Against Drunk Driving, Jr. Mustangs Hockey Team Sponsor. Plus, with his "Free Book 4 Charity" campaign, he hopes to raise another $25,000 annually from the $5 (minimum) donations, of paying it forward., visit: www.mybook4charity.com