Larger downpayments will be required by many Canadian homebuyers from next week as a new mortgage rule doubles the amount required by the CMHC for home purchases between $500,000 and $999,000 where the mortgage is more than 80 per cent of the home’s value. The hike, to 10 per cent, will have an effect but one group of buyers is set to feel the biggest pain.
Don Campbell, senior analyst at Real Estate Investment Network says that first-time buyers will be most affected, especially in the hottest markets. "It could certainly prevent them from getting into a market that is overheated," he told the CBC.
Brian Yu of Central 1 Credit recently wrote that he expected Greater Vancouver prices “have more room to grow with little risk of a significant downturn.” Yu cites young buyers as the hardest hit by the new rule. Again these are probably going to be first-timers.
RBC’s Robert Hogue agrees that the higher downpayment will hit those buyers in the hottest markets, writing that it will “raise the bar to home ownership quite materially in Vancouver.”
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