Things To Know About The New Mortgage Rules

The new federal rules for mortgages in Canada are in effect now.

The new rules state that buyers can still put a five per cent down payment on the first $500,000 of a home but must now put at least 10 per cent down on the portion over $500,000. For individuals purchasing a home for $700,000 (a common list price seen in Toronto and Vancouver), this means the minimum down payment will jump to $45,000 from $30,000.

Those purchasing a home in Toronto and Vancouver are primarily affected. First-time buyers will require larger down payments to get into the market. Individuals who plan to sell their homes to buy bigger homes, particularly in hot housing markets will not feel the pinch as they have equity built up in the properties they currently own.

The new rules are expected to have minor influence on homebuyers. When the Finance Minister Bill Morneau made the announcement on the changes back in December, he said that these rules are expected to affect one per cent or less of the real estate market.

Mild weather and low mortgage rates are expected to influence sales activity. According to a real estate professional, sales activity has been “boisterous” in Ontario, Quebec and B.C. in the first five weeks of this year due to the low mortgage rates and mild weather and not due to people purchasing homes before the new mortgage rule came into affect to avoid putting a larger down payment.

Reference: City News

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