“I think it’s crazy. If he wants to contain house prices from rising, I guess you could do that,” Vas Anton, a mortgage broker with Excel Mortgage, told MortgageBrokerNews.ca. “But how do you argue you can address affordability by increasing the minimum down payment?”
Late last week Evan Siddall, CMHC’s chief executive officer, suggested to an audience in London at the Bank of England panel on housing finance policy that minimum down payments should be increased in a bid to address housing affordability issues.
“Politicians are tempted to help first-time home buyers enter the market, but low down payments may be part of the problem adding to affordability pressures and macroeconomic vulnerabilities,” Siddall said in the speech, which was published on CMHC’s website.
But it’s first-time homebuyers that should be given a helping hand, according to Anton.
“I see day in and day out people are having issues scraping by with 5% and then they would have to do double that. So you’re putting home ownership even further away from your average Joe,” he said. “People buying a $6,$7,$800,000 property would probably be fine with a 10% downpayment, but if you’re buying between $250,000 and $300,000 I think they would (struggle).”
According to Anton, Canadians who already own homes could pony up the extra cash by tapping into equity they have already built.
The same can’t be said, however, for first-time homebuyers and new Canadians, however.
“But ask my son who is 21 and graduating from college next year if he’d be able to handle that. Unless I step in and say here sonny boy, here’s $13,000, go buy yourself a house,” Anton said. “What about new immigrants? How much money do you expect them to put aside.”
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A proposal by the crown corporation to increase the minimum down payment would unfairly harm an important home buyer cohort, argues one professional.