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AVAILABLE EXPERT – Changes to minimum down payment rates

Friday, December 11, 2015

Queen's University real estate expert John Andrew is available to comment on this morning's announcement by Finance Minister Bill Morneau that, effective February 15, the minimum down payment for homes selling for more than $500,000 will rise from five per cent to 10 per cent. The change is intended to "strengthen the resiliency of Canada’s housing finance system to promote long-term stability and balanced economic growth," according to the Department of Finance.

“This is a welcome change, clearly aimed at cooling off the only two markets in Canada that continue to experience rapid price growth, Vancouver and Toronto," says Dr. Andrew.  "It is also clearly intended to minimize the impact on first-time homebuyers.

"However, many of these first-timers actually have little choice but to purchase homes above this price threshold, and people selling a home and buying another often have enough equity built up beyond the 10 per cent minimum anyway. So this policy change, while a move in the right direction, may affect as many first-time buyers in these two markets as existing homeowners. For more expensive homes, the minimum should likely be 20 per cent since costly mortgage insurance could then be avoided. And for less expensive homes, the minimum should gradually be raised from five to 15 per cent.”

Dr. Andrew teaches real estate at Queen’s University and is Director of the Queen’s Real Estate Roundtable, a commercial real estate industry organization focused on research and executive education. 

To arrange an interview, please contact Chris Armes (613-533-6000 ext. 77513 or chris.armes@queensu.ca) or Anne Craig (613-533-2877 or anne.craig@queensu.ca) at Queen’s University News and Media Services Department in Kingston, Ont., Canada.

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