10% Minimum, Raising the Wrong Bar

Gold-Coin1

If you’ve been in the market for a mortgage in the last couple of months there is almost no chance you haven’t noticed the talk of an increased minimum down payments from 5 to 10% on loan amounts over $500,000.  What this means for you?  Well if you’re buying a house under 500k, nothing, if you’re buying a house over 500k?  Simple, instead of putting a down payment of 5% minimum, you’ll need to put down more for government backed mortgages.  Easier said than done.  This would especially leave a hindrance on first time buyers and make it quite difficult for them to get a home, which is not an ideal scenario.

In the end you would be left with 3 options.  Delay your purchase to save up more money to afford the new minimum, look for a cheaper home to avoid the new minimum, or try and get secondary funding.  None of these are quite ideal.  Or you could attempt to overthrow the government, but unlike the States we don’t have a second amendment.  In other words you’re going to be stuck using your fists, however judging by the way Trudeau knocked the socks off Patrick Brazeau, you might want to reconsider.

However, with some downsides to you, there comes some upsides to the housing market.  The government seems to be enacting the “sacrifice the few to save the many” philosophy, and in doing so slowing the housing market, and boosting the condo market.  As most “homes” that are under the 500k limit in Toronto and Vancouver happen to be condos.  The downside to this, is that it also impacts the less booming parts of our country meaning while slowing the fast paced markets in Toronto and Vancouver, it’s also slowing the already snail paced markets such as Halifax.  There is however a simple solution to this, buy a house under $500,000.  Or maybe I’m just cheap

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