Home ownership might be further out of reach for first-time home buyers as calls to raise the minimum required down payment rang through the mortgage industry in an effort to slow the surging home prices in Toronto and Vancouver. National Bank CEO Louis Vachon said that down payments should return to 10% from the current 5% minimum, and Brian Porter, chief executive of the Bank of Nova Scotia, said that they’ve taken their “foot off the gas” when it comes to mortgage growth in the two metropolises.
For many first-time buyers, whose income levels won’t have doubled in order to match the jump in down payment required – buying a home would simply be unattainable.
The argument against raising the minimum down payment required to 10% is that it’s targeting the wrong market; first-time buyers aren’t the ones driving up home prices, and buyers who would be able to afford the 10% down payment are those with larger incomes and who wouldn’t consider the new requirement to be a hardship. Home prices are steady and not nearly as high in other areas across the country, but first-time buyers in those areas would be adversely affected by the proposed changes.
"You're pricing out a generation of young people," David Rosenberg, chief economist and strategist for Gluskin Sheff and Associates, told the Business News Network. "We continue to focus on the wrong area," he said. "The focus has continually been on demand, not enough on supply."
Data may support Rosenberg’s statement; the seasonally adjusted annual rate of urban starts decreased by 2.5 per cent in May to 170,432 units. Multiple urban starts decreased by 5.7 per cent to 110,834 units in May and the single-detached urban starts increased by 4.2 per cent to 59,598 units.
If you want to work out how much you can borrow there’s a useful mortgage calculator here.

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