CMHC Getting Rid Of 5% Down For First Time Home Buyers?
Register Now06.08.20
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Buying
In today’s blog we talk about the new news about CMHC potentially getting rid of the 5% first time buyers incentive. Let’s talk about what CMHC is and what can potentially happen in the near future.
CMHC is the government body that insures mortgages. When CMHC is insuring a mortgage, it means the bank has much less risk issuing a loan to that specific individual, meaning that if the borrower doesn’t pay the mortgage, the government will pay it.
President and CEO of CMHC, Evan Siddall issued a speech to the Finance Committee saying “5% down is going to be completly eliminated.”
“People believe that owning a home is essential for retirement savings. Indeed, over the past 20 years, the average Canadian homeowner has had a tax-free gain of $340,000 in the value of their home. That sounds great, until we add in the fact that $300,000 of that gain has been created by increased borrowing. These house prices and debt levels are increasingly out of reach for young people. Homeownership actually tends to be lower in countries with higher incomes.”
This sounds like CMHC is strongly considering getting rid of the 5% down payment as being allowed, and forcing borrowers to come up with a minimum 10% down to get into the Real Estate market.
What does this mean for first time home buyers?
This means if you were considering getting into the market, now is the time to pull the trigger! We don’t know if this will go through or when this will happen but if you are a first time home buyer and relying on that 5% down payment, it may be a good time to get in to own a property.
If you want to talk about this further, call us today!
