CMHC and The Potential Down payment Rule Change
May 14, 2019 | Posted by: Mortgage InGenuity Inc.
CMHC is contemplating changing rules on down payment, increasing from 5% to 10%. Which I feel is the incorrect approach. You are going to harm the only thing that is driving our economy and this is not the solution to control housing prices.
The Government wants to control pricing with demand tactics instead of dealing with the inventory issue of homes. It is economics 101, supply and demand. Our mortgage rules are fine and they are not the problem, especially down payment. You will eliminate an entire market with this change, especially First Time Home Buyers. According to all experts that I have sat in on with CMHC, have said their default rate on mortgage are less than 1%. So My question then becomes, what aren't you telling us? Changing down payment is not the issue. First time home buyers will get money from parents and the cycle goes on and on. This too will cause risk, as parents, seniors and etc. will deplete their wealth and savings. I firmly believe that Government is going to create this 'bubble' burst with a change like this. I think it is time to research the areas that are hot and focus on making rule changes based on postal code to control mortgages or better yet allow the release of more land to build more homes. Smaller communities that do not have this problem are going to suffer this change.
What are your thoughts?