{"id":493,"date":"2015-12-31T09:35:26","date_gmt":"2015-12-31T17:35:26","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=493"},"modified":"2015-12-31T09:35:37","modified_gmt":"2015-12-31T17:35:37","slug":"housing-analysts-split-on-effect-of-higher-down-payments","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2015\/12\/housing-analysts-split-on-effect-of-higher-down-payments\/","title":{"rendered":"Housing Analysts Split on Effect of Higher Down Payments"},"content":{"rendered":"

A sharp increase in the down payment required to buy more expensive homes using government-backed mortgage insurance will affect low-equity buyers but is \u201cnot a game-changer\u201d for the BC housing market, according to Helmut Pastrick, Central 1 Credit Union\u2019s senior economist in Vancouver.<\/p>\n

However, other analysts say the increase in down payments to 10% from 5% on home values above $500,000 to a maximum of $1 million will have a chilling effect on both home sales and real estate agent incomes.<\/p>\n

\u201cThese changes are not good for realtors, especially those in BC and Alberta,\u201d said Ryan Suchet, president of Toronto-based Capital Growth Financial Corp., a company that provides commission advances to Canadian real estate agents. \u201cWe expect to see fewer home sales and lower commissions earned in 2016 when the rules take effect.\u201d<\/p>\n

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 \u2013 close to the average price in Metro Vancouver \u2013 the down payment required would be 7.8%, or $70,200, compared with $45,000 under the current regulations.<\/p>\n

\u201cLow-equity buyers will require more skin in the game and more skin at higher prices,\u201d Pastrick said. \u201cThis [policy change] is not a game-changer for the housing market given it will affect only subset of the population.\u201d<\/p>\n

According to the Mortgage Professionals of Canada, two-thirds of first-time buyers in Canada this year had down payments of less than 20%, a level that requires mortgage insurance, either through CMHC or private insurers. CMHC now provides insurance for half of the mortgages in Canada, down from 54% in 2014, according to CMHC executive officer Evan Siddall.<\/p>\n

Pastrick noted that higher down payments will affect buyers of detached homes looking houses with a rental suite.<\/p>\n

In September, CMHC ruled that 100% of the gross income from a rental suite could be applied to a buyer\u2019s income to help him or her qualify for a mortgage. In Metro Vancouver and the Fraser Valley, nearly all such houses are priced above $500,000, and Pastrick said the down payment barrier \u201cwill constrain this source of rental supply.\u201d<\/p>\n

According to Vancouver real estate analyst Ozzie Jurock, an immediate effect of the looming down payment increase could be a spike in home sales as low-equity buyers attempt to purchase before the changes come into effect.<\/p>\n

Housing Analysts Split on Effect of Higher Down Payment<\/a>s by Frank O’Brien | Business in Vancouver<\/p>\n","protected":false},"excerpt":{"rendered":"

A sharp increase in the down payment required to buy more expensive homes using government-backed mortgage insurance will affect low-equity buyers but is \u201cnot a game-changer\u201d for the BC housing … [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-493","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"\nHousing Analysts Split on Effect of Higher Down Payments • 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\/housing-analysts-split-on-effect-of-higher-down-payments\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" 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