The government did move about three years ago to require Canadians to have a 5% down payment, increasing from zero. However, most of the major banks allow for a cash back option. Mr. Clark’s own bank will give you 5% of your mortgage principal up front if you lock in a mortgage for five years or longer.According to the article, the RE industry is more open to returning amortizations to 25 years than they are on tightening rules about downpayments. I guess that follows. 0% down at 30 years is leverage at 186:1 (total mortgage over first payment) and 0% down at 25 years is 170:1. Whereas strict downpayments at 5% is 20:1 leverage. It's the leverage the industry (which lives and dies on churn) can't bear to have touched.
“A really damaging move would be significantly increasing the amount of cash a young family would have to have to qualify for a mortgage. It would take a lot of transactions out of the marketplace,” said Mr. Soper.
Nevertheless the government has targeted condominiums during this housing boom. It now forces investors to have 20% down to qualify for mortgage default insurance, up from the 5% it requires for owner-occupied buyers.Wow, they are actually doing something to tame speculation.
Still there remains some scuttlebutt the government will tweak the condo rules again with one suggestion being that 100% of condominium fees count towards debt obligations when considering how large of a mortgage a consumer can get.
Gregory Klump, chief economist of CREA, said the figure is misleading if you look at the number of unoccupied condos as an absolute number. But if you normalize it as percentage of unabsorbed inventory, it’s not historically high.I have no idea what that means. Anyone?