“Personally, I don't think anyone should be allowed to Purchase a home if they don't have at least 5 per cent of their own funds as a down payment, so this change is long overdue,” Max Cafissi of CENTUM One Financial Group Inc. wrote in the comments section of MortgageBrokerNews.ca. “I have never financed a home 100 per cent and I have been a broker since 1989.
“If you can't save 5 per cent, or get a gift from your parents, you shouldn't be purchasing a home.”
OSFI’s B-20 guidelines, enacted on November 1, 2012, prohibited any federally-governed financial institution from offering 100 per cent financing on homes. However, credit unions – which are provincially regulated – have been able to do 100 per cent funding.
And for now they will continue to do so until OSFI’s B-21 guidelines pass. But some brokers refuse to take advantage.
“I fully agree with Max Cafissi, if borrowers cannot have 5 per cent savings or gifted funds for down payment, they are NOT ready to move forward purchasing,” Angela-Wong Liao of Invis The Money Lady wrote.
Nevertheless, some industry players believe exorbitant home prices have forced buyers to mortgage 100 per cent of their homes.
“You're both basing your views on ideology. Especially during boom times, and clients can't save as fast as prices rise, $0 Down makes huge sense,” one anonymous commenter wrote. “I've had clients end up with 100k equity in a few short years, where the savers were still sitting on the sidelines.
“Also, paying 5 per cent, rather than the discount rate, they're in a better position to weather a rate increase, as they were already paying it.”
B-21 to erode credit union competitive advantage
Brokers discuss client disclosure and credit unions
Brokers are divided on one product that may be on the chopping block if OSFI B-21 guidelines get the go-ahead following their formal review.