{"id":428,"date":"2015-12-15T08:46:05","date_gmt":"2015-12-15T16:46:05","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=428"},"modified":"2015-12-15T08:46:23","modified_gmt":"2015-12-15T16:46:23","slug":"new-mortgage-rules-unlikely-to-cool-vancouvers-red-hot-housing-market","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2015\/12\/new-mortgage-rules-unlikely-to-cool-vancouvers-red-hot-housing-market\/","title":{"rendered":"New Mortgage Rules Unlikely to Cool Vancouver\u2019s Red-Hot Housing Market"},"content":{"rendered":"<p style=\"text-align: justify;\">The federal government\u2019s decision to raise the minimum down payment for new insured mortgages will have only a modest impact on Vancouver\u2019s red-hot real estate market, observers say.<\/p>\n<p style=\"text-align: justify;\">The Department of Finance announced the policy change Friday. Effective Feb. 15, it said, the minimum down payment for new insured mortgages will rise to 10 per cent from 5 per cent on homes priced above $500,000. The 10% down payment will apply to the portion of the home over the $500,000 mark. The 5% minimum down payment will remain for properties valued below $500,000. Properties priced at and above $1-million already require a minimum down payment of 20%.<\/p>\n<p style=\"text-align: justify;\">Helmut Pastrick, chief economist at Central 1 Credit Union, said he expects the move to have little impact on Vancouver\u2019s real-estate market. On a $600,000 home, Mr. Pastrick said, the minimum down payment will increase to $35,000 from $30,000. On a $900,000 home, the minimum down payment will increase by $20,000, he said.<\/p>\n<p style=\"text-align: justify;\">\u201cObviously, it makes it a little tougher for low-equity buyers to buy in that $500,000 to $1-million price range,\u201d he said in an interview.<\/p>\n<p style=\"text-align: justify;\">Cameron Muir, chief economist at the BC Real Estate Association, said about 35% of Metro Vancouver homes sell for between $500,000 and $1-million.<\/p>\n<p style=\"text-align: justify;\">\u201cIt sounds like a large number, but those people that are in that price range, looking to only put down a 5% down payment, it certainly is not that common,\u201d he said in an interview. \u201cAnd so, as a result, I don\u2019t think it\u2019s going to have a substantial impact on the market. But some potential buyers may put off buying as a result of having to save a little bit more down payment.\u201d<\/p>\n<p style=\"text-align: justify;\">Chris Catliff, president and chief executive officer of BlueShore Financial, said he, too, does not expect the move to have a significant impact.<\/p>\n<p style=\"text-align: justify;\">\u201cI don\u2019t think it\u2019ll cool the hot market, I don\u2019t even think it\u2019ll make it lukewarm. But I think it\u2019ll help keep it from boiling over,\u201d he said in an interview.<\/p>\n<p style=\"text-align: justify;\">In a statement, Vancouver Mayor Gregor Robertson said he is encouraged to see Ottawa \u201cstart to take steps to control housing prices and reduce risk in our real estate market. It\u2019s going to take a number of tools, both in terms of supply and demand, to improve housing affordability in Vancouver.\u201d The mayor said he\u2019s also hopeful Ottawa will direct Canada Mortgage and Housing Corp. to collect better data on foreign investment, and deliver on campaign commitments to support co-ops and create new tax incentives for rental housing.<\/p>\n<p style=\"text-align: justify;\">But Tsur Somerville, an associate professor at the University of British Columbia\u2019s Sauder School of Business, questioned Friday\u2019s announcement, calling it the \u201cwrong instrument for the wrong crisis.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cThe people that are most likely to be affected by this are first-time buyers, people with relatively low down payments, most likely younger households.\u201d he said in an interview. \u201cI don\u2019t look at what\u2019s going on here and say, \u2018Gee, this is a market that\u2019s really being driven by first-time buyers bidding crazy numbers to get into the housing market.\u2019\u201d<\/p>\n<p style=\"text-align: justify;\">Prof. Somerville added if foreign buyers are driving up home prices in Vancouver and Toronto, \u201cthen this is going to do nothing.\u201d<\/p>\n<p style=\"text-align: justify;\">The Department of Finance said increasing the minimum down payment \u201creduces housing market risks by increasing borrower equity.\u2026In the short term, this targeted measure will dampen somewhat the pace of housing activity over the next year, as some prospective home buyers save for the increased minimum down payment.\u201d<\/p>\n<p><a href=\"http:\/\/www.theglobeandmail.com\/news\/british-columbia\/new-mortgage-rules-unlikely-to-cool-vancouvers-red-hot-housing-market\/article27738381\/\" target=\"_blank\">New Mortgage Rules Unlikely to Cool Vancouver\u2019s Red-Hot Housing Market <\/a>by Sunny Dhillon | The Globe and Mail<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The federal government\u2019s decision to raise the minimum down payment for new insured mortgages will have only a modest impact on Vancouver\u2019s red-hot real estate market, observers say. The Department &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2015\/12\/new-mortgage-rules-unlikely-to-cool-vancouvers-red-hot-housing-market\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-428","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Mortgage Rules Unlikely to Cool Vancouver\u2019s Red-Hot Housing Market &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2015\/12\/new-mortgage-rules-unlikely-to-cool-vancouvers-red-hot-housing-market\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"New Mortgage Rules Unlikely to Cool Vancouver\u2019s Red-Hot Housing Market &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"The federal government\u2019s decision to raise the minimum down payment for new insured mortgages will have only a modest impact on Vancouver\u2019s red-hot real estate market, observers say. 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