Eric Glazenberg

New Mortgage Rules Come into Effect Toda...

16 February 2016
Eric Glazenberg

As of today, the Federal Government's newest mortgage rules take effect. As a reminder, the new regulations will increase the minimum down payment required to buy a home from 5% of the prucase price, to slightly more than this if the home is priced in the $500,000 - $1,000,000 range.

  • The portion of purchase price beyond $500,000 will now require a 10% down payment. For example: a home costing $750,000 will require a $50,000 down payment - 5% on the first $500,000 and a 10% down payment on the remaining $250,000.  Previously, the minimum downpayment required on a $750,000 home would have been $37,500.
  • The minimum downpayment for homes over $1,000,000 is still 20%
  • Buyers shopping for homes below the $500,000 mark will be unaffected 

How we feel this will effect the housing market:

  • Buyers will now have to have a larger down payment if purchasing homes over $500,000.  They'll need to have a little more "skin in the game" in the $500,000 - $1,000,000 range.  
  • There may be a slight uptick in sales of properties valued at less than $500,000, while properties in the $500,000 - $1,000,000 range may see a small decline in volume due to some buyers being priced out of this range.
  • Buyers purchasing in the $500,000 - $1,000,000 range with downpayments of more than 7.5% should remain uneffected.