Mortgage changes will impact some buyers

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Changes to Canadian mortgage down payment rules in effect starting this month will impact some homebuyers in the region, according to Patricia McKean, a lead planner with Mortgage Architects.

Effective Jan. 1, any house between $500,000 and $1 million falls under the new rules, with the down payment increasing from five to 10 per cent for the portion above $500,000 and below $1 million.

“Any house between $500,000 and $1 million you can no longer put five per cent down because it now becomes a sliding scale,” said McKean, who is also deputy reeve of Mountain View County. “So none of our rules are changing for under $500,000 or over a million, but in between we are seeing changes.

“Say it was a $700,000 house, you would put five per cent down up to $500,000, and then from 500-700 if that was the price, you will have to put 10 per cent down. So instead of your standard $35,000 deposit, you would have put down on a $700,000 house before, you are now looking at $45,000.”

The changes apply only to new mortgages, she noted.

Asked if she believes the change may lead to fewer home purchases in Mountain View County in 2016, she said, “It is hard to say, it just means people will need a higher amount of down payment for larger properties. Between this and the economy I anticipate the market being slower.”

Asked if the changes will mean people will pay off their mortgages earlier, she said, “In a sense it would be paid off sooner because the client would have more equity, but that will be the only difference.

“Right now the mortgage rates are low and falling government-bond yields are usually good for homeowners in Canada because mortgage rates tend to follow suit. Not this time.

“Three of Canada’s biggest lenders have raised mortgage rates and more increases are expected as new regulations, a weak economy and higher costs prevent banks from capitalizing on lower borrowing rates in the debt market where they finance their mortgages.”

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Dan Singleton

Dan Singleton is the editor of the Mountain View Gazette who joined the newspaper in 1994. He covers news, municipal politics and community events in Mountain View County. He is also a longtime columnist for other publications of Mountain View Publishing.