Canadians looking to buy homes valued over $500,000 will soon be required to come up with larger down payments in a move the Federal Finance Minister says is designed to ensure stability in Canada's biggest real estate markets.
Under changes announced Friday by Federal Finance Minister Bill Morneau, homebuyers will have to put a 10% down payment on the portion of the price of a home over $500,000.
Anything under $500,000 will still only require a 5% down payment. The changes are to take effect February 15th, 2016.
For buyers in Toronto, for example, where the average house price is $625,000, the change will mean that they will have to come up with an extra $12,000 in order to qualify for mortgage insurance through the Canada Mortgage and Housing Corporation.
"The new measure is aimed at expensive homes while still encouraging first-time buyers to get into the market.
The stiffer down payment requirement is one of three new measures targeting the stability of the housing market. Financial institutions will face new capital requirements to keep pace with the growing risk of the real estate markets they bankroll. In addition, the CMHC will change the fees it charges issuers of mortgage backed securities.
To read more about the Minister's announcement, click here