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Finance minister announces down payment rule changes

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Justin da Rosa | 11 Dec 2015, 10:42 AM Agree 0
Finance Minister Bill Morneau announced the new down payment structure for government-backed mortgages early Friday
  • Don Johnson | 11 Dec 2015, 11:12 AM Agree 0
    What a crock -- We have a finance minister who can not and will not balance the governments books, who is increasing debt every day, (which effectively is an increasing debt on us the workers and taxpayers) and he has the nerve, nay say I, "the sure audacity" , to say we need to be careful about assuming debt. They sure have no problem collecting HST on land sales, realty fees, legal fees, capital gains taxes on farms, agreeing to double land transfer tax's and have no desire to reign in Provincial debt that is destroying the economic base - yet we the tax payers need to be protected. If he was serious they would get the government debt under control and stop their insane "out of control" spending which is a prime factor in causing inflation for prices, rising interest rates and devaluation of the Dollar (which makes us all poorer in the international sense). He's worried housing prices may be affected by rising interest rates -- I'm worried what happens when a Trillion and half dollars of government/provincial debt runs into a 2% interest rate rise and we the tax payers get stuck with another 30 billion dollars of interest debt we have to pay in new taxes. (and they can't even balance their budgets with current debt rates) What a crock !
  • John | 11 Dec 2015, 11:15 AM Agree 0
    Gee thanks big gumbmit. In the Maritimes, especially in rural the Maritimes where the average house price hovers around $130,000, the HST on new homes makes the 5% down payment requirement laughable. A typical new home purchase in the Maritimes after the HST and the 5% down just ensures that Maritimers will continue with the highest demographic of renters across the country.

    Combine the insurance portion of a CMHC insurance on the loan and the HST amortized over 25 years usually financed over 25 years, and you do not have to be a genius to figure out why most people out east rent. To people who can afford $500,000 this is a tiny slap on the wrist, to most most Maritimers it is the kiss of death when it comes to home ownership even with median house prices in the $150,000 range. Make it sound like you are doing small time first time buyers a favour by not penalizing them for under $500,000. You couldn't find more than a handful of Easterners who can afford to spend $500,000.
  • DW | 11 Dec 2015, 11:16 AM Agree 0
    But it's ok to let lender sell boats, ATVs and 90" TVs at 28% and have people approved for $50,000 credit limits at Canadian Tire and Costco?

    When will the government stop catering to the banks. Make these high interest debts illegal and Canadians will be just fine. Real Estate is a secured loan that provides the need for housing and rates are incredibly low. Why not empower Canadians with home ownership instead of oppressing them with rules and regulations that allow the rich to grow their real estate portfolios, while the poor pay their mortgages in the form of unaffordable rents.

    This absolutely makes no sense at all to me!

  • Frieda | 11 Dec 2015, 11:29 AM Agree 0
    I live in the T dot where a dilapidated detached garden shed sells for about $500.000. I see no end of clients who are still talking about the cheap money that is out there. My response? Yes interest rates are high BUT maybe a larger down payment may prevent some folks from over extending. The practise has far reaching implication to the economy. If the number of over encumbered home owners is decreased we are all in a safer positipon. Plus it will help keep the growing industry of shadow lending more in check. We do not need a mirror of the American housing crisis here in Canada. Just my tow cents
  • Frieda | 11 Dec 2015, 11:29 AM Agree 0
    I live in the T dot where a dilapidated detached garden shed sells for about $500.000. I see no end of clients who are still talking about the cheap money that is out there. My response? Yes interest rates are high BUT maybe a larger down payment may prevent some folks from over extending. The practise has far reaching implication to the economy. If the number of over encumbered home owners is decreased we are all in a safer positipon. Plus it will help keep the growing industry of shadow lending more in check. We do not need a mirror of the American housing crisis here in Canada. Just my tow cents
  • Max | 11 Dec 2015, 11:30 AM Agree 0
    Mr. Finance Minister, if you really want to help people, stop unnecessary spending and reduce taxes. Mean it when you say you want to help people.
  • Donald Thump | 11 Dec 2015, 12:04 PM Agree 0
    You nailed it right on the nose. Couldn't have said it better myself.
  • LB | 11 Dec 2015, 12:19 PM Agree 0
    We are so trained by the banking institutions to expect interest to accompany debt. Where our government creates wealth it could also create the required money supply interest free, and leave the banks to private investment and expenditure. Why do we think we need to be enslaved the banks?
  • Jonathan Stewart | 11 Dec 2015, 12:30 PM Agree 0
    Don Johnson, I couldn't agree more. Thank you for seeing through this with clarity and common sense. Right on.
  • John Winters | 11 Dec 2015, 01:07 PM Agree 0
    Sounds like another band aid to keep the ship from sinking. Here is my take on whats happening.
    Banks make money because for every dollar you deposit they can lend out at least 10.
    The more they lend the more they make.
    They like the idea of low interest rates because they can get money for virtually free which means they can lend it at lower rates which in turn makes more people eligible to borrow.
    Example:
    The cost to the bank of $1 million on deposits even at 1% is $10,000 ( interest paid on deposits)
    The bank can then loan $10 million at 3% which is $300,000 (interest received on loans/mortgages)
    This is a gross profit of $290,000 and does not take into account the outrages service fees they charge.

    Because of the ease in financing, property prices are rising. This is not because the value of the property has increased but rather because the interest rates are so low. The banks win again because the higher the values the more they can lend and without fear of loss because the government insures most of the mortgages.

    Just ask yourself, if it was your money would you give someone a mortgage for 95% of the value of the property ? The legal costs and commission to collect your money would be more than this. You would have to be a fool even at a 10% deposit.

    The reality is that the banks run the finances and at the end of the day they never lose their money, only yours.
    The politicians fall in blindly. You would think that they would have learned from the experience in the USA. but they don't.
    Dumb and dumber.



  • | 11 Dec 2015, 01:26 PM Agree 0
    There is no HST on residential real estate, John.
  • Bob | 11 Dec 2015, 03:12 PM Agree 0
    To all those with the "poor me" comments: our economy sputters with the out of control borrowing available to the masses... 95% financing on the most expensive house my income can afford at today's interest rates... lowest rates in history... the more easily one can borrow. since 2008 we have gone from 40 year amortization, 100% financing to the now 25-yr amortization, 95% maximum financing... inflated prices have come in line with the borrowing... still interest rates keep prices up... easy to borrow.
    This new program... should one read it a little deeper... the down payment will be 10% for the portion of the purchase price over $500,000. A $600,000 purchase today requires a down payment of $30,000... in February it will change to $5% 0n the first $500,000 = $25,000 and 10 % on the remainder $100,000 @ 10% = $10,000.... = $$35,000.... if you are going to commit to buying a $500,000 home and the extra $5,000 keeps it out of reach for you... then you need to buy a less expensive home... And if enough people are in this position... the sellers are going to have to adjust their asking prices accordingly...
    This what is called "the market trends"... stop your whining and come with an idea that will help...
    unfortunately we have developed into a nation of "entitlement"...get over it...
  • djd | 11 Dec 2015, 04:47 PM Agree 0
    I very much agree with Bob. Everybody needs to get a grip. What seems to be lost in all of this is that cheap and easy money drives house prices up. That creates a market where house prices increase at a rate that is much greater than salary increases. Something eventually has to give. It has happened in other markets around the world. Why is Canada any different, especially when you consider our disproportionate dependence on the resource sector, and oil in particular. The future is not exactly rosy right now.

    The only winners in the real estate market right now are the sellers and real estate agents. Meanwhile, buyers are scrambling to get on what many prospective buyers have been lead to believe is the sure fire gravy train. I was in the market during past booms. The rhetoric was the same. Then the market corrected 25% in my neighborhood in North Toronto in the late 1980s. Many people lost everything. Industry pundits will gladly pontificate that today is different. Well it isn't. It's a cycle like everything else in the economy.

    What's troubling in all of this is that mortgage debt is a major contributor to the per capita debt in Canada - now one of the highest in the world.

    Even real estate agents have to ask themselves the simple, unbiased question - where does all of this ultimately takes us if measures aren't introduced to try and bring some degree of control to what is becoming a very precarious situation?

  • Homeowner | 20 Jan 2016, 03:33 PM Agree 0
    He comes from a very rich family and I don't think he cares about the middle class anyway so.
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