The federal government recently announced additional changes to the down payment required when financing the purchase of a home.
Starting in February 2016, CMHC will require a 10% down payment on the portion of the sales price of any home over $500,000. The 5% down payment requirement remains for purchases below $500,000, and homes valued at over $1 million dollars still require a minimum down payment of 20%.
If you buy a property below $500,000 or over $1 million nothing changes.
But why the change for those in between?
According to a quote by our new Finance Minister Bill Morneau:
We recognize that, specifically in the Toronto and Vancouver markets, we have seen house prices that have been elevated and we want to make sure that we create an environment that protects the people buying homes so they have sufficient equity in their home.
Time will tell if this new change will affect prices in Vancouver and Toronto since job creation remains above the Canadian average and immigration contributes greatly to the strong values in those markets.
On another note, the US Federal Reserve raised interest rates for the first time in 9 years by 25 basis points to a range of 0.25–0.50% ending a historic era of nearly 0% interest rates. The Fed’s era of record-low rates was aimed at driving an economic recovery, following the worst recession since the Great Depression.
Buying real estate is still one of the best long term investments anyone can make however. We’re here to help you save money and make informed decisions regarding your mortgage needs.
Contact us today.