“We expect some more changes like the CMHC changes. [Possibly] eliminating 5% altogether, requiring 10% down,” Paul D’Abruzzo, an agent with Rock Star Real Estate, told REP. “Things that won’t stop the market but will slow it down. Any slight change is a death shot for first-time homebuyers. It’s a little scary.”
Earlier this year, the federal government changed the down payment requirements for homes purchased with high ratio mortgages.
All home that cost between $500,000 now require 10% down; homes in excess of $1 million now require a full 20% down payment.
Home purchased with less than 20% down require mortgage default insurance, which is often provided by CMHC.
It was the latest policy change meant to tighten lending standards and better safeguard the housing industry from defaults.
Between 2008 and 2012, the federal government has made a number of policy changes, which include requiring a minimum of 5% down; decreasing the maximum amortization period to 25 years; and capping the maximum insurable home price at below $1 million.
And many industry veterans believe the federal government isn't quite finished with its policy tinkering.
It is unknown what further policy tightening would entail, though speculation abounds.
However, National Bank economists recently issued a warning to policymakers, pleading prudence when considering further changes.
“From a fiscal perspective, housing is something of a cash cow for Canadian governments,” National Bank economists Marc Pinsonneault and Warren Lovely wrote in a research report, published in late August. “With so much at stake—economically and fiscally—policy makers would be wise to tread very careful. This is one cash cow you don’t want to tip over.”
With several markets performing at record levels, one industry veteran believes additional mortgage related policy may be in the future.