CMHC Head Advocates Higher Down payment for Insured Mortgages

I just read an article today that stated the CMHC leader wants to raise the minimum down payment for insured mortgages to further ease the demand for homes.  I feel that this would put the dream of home ownership even further away for most families.  The tendency for people to borrow more than they can afford has been going on for hundreds of years, regulations that attempt to stop this behavior are not likely to meet with much success.  I agree with the 10% requirement for more expensive homes (500K+) which will help first time buyers to look at more affordable homes and not bite off more than they can chew.  However, raising the bar for first time home buyers to need to save more than 5% for their first house will squeeze many young families out of the market, which MAY reduce prices but it could just as easily have NO effect on pricing – just like the most recent tax in BC on foreign buyers.  The demand for homes is not going down, we have a growing population both locally and via immigration – especially in this case being that one of the many appeals of moving to Canada is the ability to have your own home for your family.  Real estate markets can be affected by many factors, but at it’s core the issue of a home buyer taking on too much mortgage debt is a matter of financial education – someone taking on too much debt is caused by a lack of education around how debt is structured, obtained, and paid back.  I feel that more study/work effort should be spent here rather that knee-jerk reactions such as raising the down payment requirement to attempt to legislate the behavior you want.

 

To your success,

 

Tim Reid

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About Tim Reid

About Tim Reid

Tim is a sophisticated real estate Investor and Telecommunications Engineer. He has completed projects in Calgary and the US, and has partnered with experts in all areas of real estate.

Tim is also a real estate educator/Mentor who is always willing to help new investors accelerate their business to the next level. Through holistic and custom courses Tim helps investors of all backgrounds reach their business goals faster.