An increase to the required down payments for homes valued above $500,000 is set to take effect on February 15, a development which some observers said is most likely to disproportionately affect growing families and buyers who are looking to upgrade to larger abodes.
The new rules would oblige buyers to put down at least 10 per cent of the home’s value as an initial payment to become eligible for mortgage insurance.
Industry players said that the reason for the projected effect on families and move-up buyers is that the increased down payment for insured mortgages might block people from incurring greater debt in the first place. According to Fifth Avenue Real Estate Marketing Ltd. president Scott Brown, paying off the mortgage isn’t the issue for such consumers, but rather load management and the lack of supply in the family-sized property sector.
Other experts, however, noted that the negative effects would be negligible, and the benefits of the policy revisions would outweigh any potential undesirable impact.
“On a nationwide basis, we expect the number of transactions that this will impact to be minimal – significantly less than the initial industry reaction would lead consumers to believe,” Royal LePage Real Estate Services Ltd. president and CEO Phil Soper told the Vancouver Courier
“The change will produce an added benefit akin to a slight tap on the brake,” Soper added, pointing at the firm’s projected 9 per cent real estate price growth for this year.