Could the minimum down payment in Canada soon be increased to 10%? It’s possible.
In his address to the House of Commons Standing Committee yesterday, the head of CMHC, Evan Siddall, stated: “Unless we act, a first time homebuyer purchasing a $300,000 home with a 5 percent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 percent… In comparison, a 10 percent down payment offers more of a cushion against possible losses.”
Other key highlights from Siddall’s address:
- CMHC is now forecasting a decline in average house prices of 9-18% in the coming 12 months
- CMHC estimates that 12% of mortgage holders have elected to defer payments so far, and that figure could reach nearly 20 percent by September.
- Canada’s household debt-to-GDP ratio will increase to more than 115 percent in the second quarter of 2020, and reach 130 percent by September, due to increased borrowing and GDP declines. Pre-crisis debt-to-GDP was 99 percent
- Looking at debt multiples of disposable income, CMHC estimates this measure will climb from 176 percent in late 2019 to well over 200 percent through 2021
Predictions, indeed that will impact those purchasing 500k or below. The future remains to be seen, and the other insurers have yet to comment.
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Angela Calla is a 16-year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from all sales will be donated to Access Youth Outreach Services. Angela can be reached at firstname.lastname@example.org or 604-802-3983.