“It’s going to affect first-time buyers in Toronto and Vancouver who are trying to buy a house instead of a condo,” James Laird, president of CanWise Financial, told MortgageBrokerNews.ca. “It may push some of those buyers to the condo market; it may force them to borrow from their parents; or it may force them to put off buying and rent for longer.”
Finance Minister Bill Morneau announced new down payment rules for government-backed mortgages on Friday morning.
The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote.
The changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market, according to the ministry.
And while many are quick to criticize any government tinkering, the most recent changes are largely being accepted by brokers.
“The truth is the first-time buyers who are purchasing in Toronto and Vancouver are the riskiest; I think (the rules) are well thought-out and targeting the right area of concern,” Laird said. “The government has already used five different levers (including down payment and CMHC premium increases, and amortization decreases) to slow down the market, but Toronto and Vancouver keep chugging along.”
Buyers in these two major markets will feel the effects of the upcoming down payment rule changes, according to one industry professional.