Canadian government has made changes to down payment rules that will be effective by Feb 2016. These new rules are much better than previous ones. The updated percentages will affect the properties whose prices are between $500,000 to $1 million.
Below is how these new rules work:
- 5% down payment on first $500,000
- 10% down payment on the remainder of purchasing cost
- no change to default insurance premiums
- no change in down payments for properties above $1 million
Besides this, first-time home buyers who buy properties worth below $500,000 will face no difference.
In addition to the modifications in down payments, there are changes to fees of lender securitization and capital requirements. These amendments will increase costs for granter which will most likely be passed down partly or totally to the mortgage buyers.
How will these increase in costs affect the mortgage pricing? There is an estimation of changes of 3-8 basis points in securitization fees. More basis points will be added because of higher capital requirements. In whole, it has been anticipated by the experts that, with the time, there will be approximately 5-10 basis point increase in mortgage prices.
To conclude, we believe that the revision in guarantee fee will hardly effect the mortgage rates.