Low down payments are ultimately detrimental to first-time buyers - CMHC head

The head of the Canada Mortgage and Housing Corp. (CMHC) said that contrary to the popular conception of providing greater access to residential properties, low down payments are ultimately harming first-time buyers.
 
“Politicians are tempted to help first-time homebuyers enter the market, but low down payments may be part of the problem, adding to affordability pressures and macro-economic vulnerabilities,” CMHC president Evan Siddall said, as quoted by BuzzBuzzNews.
 
In a recent speech at the Bank of England’s offices in London, Siddall argued that regulators should begin considering increases to the minimum down payment to counteract the grave risk introduced to Canada’s housing sector by the massive increases in borrowing and demand—both precipitated by record-low interest rates.
 
Siddall added that regulators should look into implementing income-based limits on the loan sizes that debtors could qualify for. Such a measure would complement the stricter stress test recently introduced by Finance Minister Bill Morneau (which measures a borrower’s ability to service a mortgage on a 4.64 per cent 5-year fixed rate) and last year’s raise on the minimum down payment of a home worth over $500,000 to 10 per cent.
 
“We expect that these macro-prudential policy changes will moderate demand for housing in Canada's housing markets, limiting price increases and making houses more affordable,” Siddall said.







Source: http://www.canadianrealestatemagazine.ca/news/low-down-payments-are-ultimately-detrimental-to-firsttime-buyers--cmhc-head-217730.aspx

Freeze mortgage rules until impact is known says Canada Guaranty boss

Recently introduced mortgage regulations should be assessed to see how they are working before any more are introduced, the CEO of mortgage insurer Canada Guaranty says.

Speaking to the Globe and Mail, Andrew Charles said that first-time buyers are already struggling to become homeowners and are not the reason for price gains in hot markets such as Toronto and Vancouver.

“Regulatory changes over the last few years have made the first-time home buyer a very modest player in the overall Canadian housing market,” he said.

Just last week, the CEO at CMHC Evan Siddall said that there could be a rise in minimum downpayments to further curb price appreciation and financial risk but Charles said such measures would impact the wrong buyers and hurt smaller markets.

He further warned that further changes could have dire consequences for Vancouver, which has already seen activity easing and could be tipped into a sharper correction.
 










Source: http://www.canadianrealestatemagazine.ca/market-update/freeze-mortgage-rules-until-impact-is-known-says-canada-guaranty-boss-217467.aspx

Regulators should explore boosting minimum down payment on homes: CMHC

The head of Canada's federal housing agency says regulators should explore the possibility of raising the minimum down payment required on a home as a way of easing affordability and reducing risk to the financial system.

Evan Siddall, president and CEO of Canada Mortgage and Housing Corp., says that although politicians are tempted to help first-time buyers, low down payments fuel demand and lead to higher housing costs.

Siddall says that ends up hurting the first-time buyers that the government wanted to help.

Last year, Ottawa raised the minimum down payment on the portion of a home worth over $500,000 to 10 per cent.

Siddall said in a speech at the Bank of England's offices in London that increasing the minimum down payment even further could help offset the effects of rock-bottom interest rates, which have encouraged borrowers to take on excessive mortgage debt.

He added that regulators should also explore the possibility of imposing a loan-to-income limit as Ireland, the U.K. and a few others have done.







Source: http://www.canadianrealestatemagazine.ca/news/regulators-should-explore-boosting-minimum-down-payment-on-homes-cmhc-217374.aspx