The new down payment rules are in full effect. Those purchasing homes above $500,000 will be required to put 10% down on any additional amount above $500,000. Home buyers who purchase homes below $500,000 will see no change. Homes above $1,000,000 require 20% down payment. This is a much better solution than the minimum 10% down payment to $1,000,000 that was under consideration.
While this might sound like a significant change, less than 1 in 10 first time homebuyers in Canada purchase a home valued at more than $500,000 and a substantial amount of those buyers put more than 5% down.
So who does it affect? It’s targeted at buyers in larger Canadian cities like Toronto and Vancouver. Our government appears to be trying to slow down the real estate market in larger cities and manage their risk regarding CMHC insured mortgages. The Canadian Real Estate Association (CREA) confirmed that real estate prices across the country have risen 18% year over year but if Vancouver and Toronto were removed, the increase is at a more sustainable rate of 5.4%.
Lenders are gearing up for the spring market with competitive rates and real estate inventory is beginning to grow in most markets. Whether you are looking for your first home, your dream home or an investment, now is the time to get a mortgage pre-approval and lock in your rate.