Feds increase minimum down payment for homes over $500000

BNN looks at the type of houses you can purchase across Canada for roughly $500,000.

Morneau used the example of a $700,000 home, which will now require a minimum down payment of $45,000, or an increase of $10,000 above what the existing minimum of 5 per cent requires.

The measure will not affect people who already hold mortgages, said Morneau.

In this case, a $1-million home would require a $75,000 down payment instead of the current $50,000.

Homebuyers will have to put 10 per cent down on the portion of the price over half-a-million dollars.

In Vancouver that ratio is 33% and in Toronto it’s 40%. The average price of a detached home in downtown Toronto in November was C$1.02 million, though condos were C$415,316.

“We recognize that, specifically in the Toronto and Vancouver market, we’ve seen house prices that have been elevated”, Morneau said.

“For buyers who are looking to get into their first home in the City of Vancouver, it’s going to be much more of a challenge.”

“You know, we are taking measured approaches to make sure we protect Canadians”, he replied.

Several consecutive years of record low interest rates have enticed new buyers into the housing market.

“It is a prudent measure, in my view, but it is unlikely to have a significant impact on the high end of the housing market where buyers typically have the ability to make substantial down payments”.

“This will impact one per cent or less of the market”, Morneau told a news conference.

And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.

Financial institutions will face new capital requirements to keep pace with the growing risk of the real estate markets they bankroll.