Tighter mortgage rules requiring a 10% down payment on properties worth more than $500,000 take effect today.
The measure was introduced by federal Finance Minister Bill Morneau in December and is intended to cool down the overheated real estate markets of Vancouver and Toronto.
Under changes that come into effect February 15, 2016, the minimum down payment required for mortgages insured through Canada Mortgage and Housing Corp. (CMHC) will remain at 5% for homes priced below $500,000, but rises to 10% on homes valued above $500,000 and below $1 million. For example, on a $900,000 home – close to the average price in Metro Vancouver – the down payment required would be 7.8%, or $70,200, compared with $45,000 under the current regulations.
Housing analysts have been split on how much of an effect the changes will have.
“Low-equity buyers will require more skin in the game and more skin at higher prices,” said Helmut Pastrick, chief economist for Central 1 Credit Union. “This [policy change] is not a game-changer for the housing market given it will affect only subset of the population.”
Chris Catliffe, CEO of Blueshore Financial Credit Union, said he believes the change will not affect Vancouver's most expensive homes, but it will cool down the non-luxury market.
Analysts expected to see heated activity in January as buyers rushed to complete deals before the new rules came into effect. Statistics from the Real Estate Board of Greater Vancouver indicate that sales in January were 46% above average and the second highest January on record.
- with files from Frank O'Brien
@bizinvancouver
