Government imposed minimum deposit % - Ontario

GoRentFreeFast · Dec 21, 2009

I heard on the news this morning (Monday December 21st) the Government is planning on sticking its nose into your home lending/borrowing habits again by legislating mandatory deposit percentage on all home purchases, new and preoccupied...Anyone know what that "mandatory deposit %” is proposed to be?? I have heard in conversations this morning anywhere from 10% to 15% minimum mandatory deposits.

Philip

markl · Dec 21, 2009

Seriously they are doing this again?

We will get another run before they change the amm periods and down payment amounts just like what happened when they scaled back from 40 - 35 years and 100% back to 95% LTV.

I would like to ask why there is no forward thinking on this ahead of time and now they make another knee jerk reaction to try to fix it all because 10% of current mortgage holders may be in trouble when interest rates increase which to be honest with those borrowers are probably not paying the dirt cheap rates at the moment because they did not qualify so they are with a B lender paying higher rates to begin with. Anyways just my little rant this morning.

fumbrunner · Dec 21, 2009

Yes, Saw the article this morning as well. I would guess that they will enforce a 10% down 30 yr amoritization. Unfortunate for those looking to buy with little down, but good news for those with rentals looking for good tenants. They have to stay somewhere while they save. It would also reward investors with equity, as it seems everyone wants to purchase investment properties at the moment, given the low DP requirements. The supply of investment properties, at least in Winnipeg, is non-existent.

zimnicki · Dec 21, 2009

http://www.bloomberg.com/apps/news?pid=206...id=alleWDMx9pcY

may be a while before this is set in stone, for now keep buying and see what happens....

Nir · Dec 21, 2009

pls relax: making it more difficult to purchase RE by worsening mortgage conditions does not necessarily reduce investment properties` market value.
hint: think about what it`ll do to the rents you collect. cheers.

Thomas Beyer · Dec 21, 2009

QUOTE (GoRentFreeFast @ Dec 21 2009, 06:21 AM) I have heard in conversations this morning anywhere from 10% to 15% minimum mandatory deposits.

some text here: http://ca.news.yahoo.com/s/reuters/091221/...ss_us_mortgages

This would make sense to me .. 5% is WAY TOO LOW !!

If you buy a house for, say 300K, and don`t even have 30K to put down from savings, parents or with your spouse then you should not own a house. We saw how that movie ended in the US or the UK .. so Jim Flaherty is right this time to impose stricter / higher down payments !

Chose: a new car or a house .. and with 10% we will have a more balanced less speculative housing market with less defaults at tax payer expenses !

jeffjas · Dec 21, 2009

There are two things that put a smile on my face today and reading this article in the Globe was one of them...Its about time the Feds increased the 5% min. down.

This means a person will have to rent for a longer period, great news for landlords and it will strengthen the housing market overall. Did you actually think Canada can sustain 15% - 20% appreciation in real estate every year.

Thomas Beyer · Dec 22, 2009

QUOTE (jeffjas @ Dec 21 2009, 08:06 PM) ... Did you actually think Canada can sustain 15% - 20% appreciation in real estate every year.
no .. especially in a recessionary environment ..

but: some markets like BC or ON have the HST coming mid 2010 and much buying is happening before that deadline .. expect prices to drop summer 2010 by around 5-8% to compensate for that new tax !

I do not see these prices increases .. more a stable bottom .. in SK and AB ..

bizaro86 · Dec 22, 2009

QUOTE (ThomasBeyer @ Dec 22 2009, 09:02 AM) no .. especially in a recessionary environment ..

but: some markets like BC or ON have the HST coming mid 2010 and much buying is happening before that deadline .. expect prices to drop summer 2010 by around 5-8% to compensate for that new tax !

I do not see these prices increases .. more a stable bottom .. in SK and AB ..

I bet it will be a drop of more than that after the tax takes effect. People are extremely deadline driven, and once that urgency is gone, many will exit the market.

A perfect example is income taxes. I used to go to the post office every evening for another business I ran. The busiest season was of course before Christmas, but the busiest single day was by far the day income taxes were due. People put it off to the very last day. The day after, it was empty.

HST will probably have the same effect on the market for real estate as the tax deadline has on the market for stamps.

Michael

luckyluciano · Dec 25, 2009

QUOTE (bizaro86 @ Dec 22 2009, 05:33 PM) I bet it will be a drop of more than that after the tax takes effect. People are extremely deadline driven, and once that urgency is gone, many will exit the market.

A perfect example is income taxes. I used to go to the post office every evening for another business I ran. The busiest season was of course before Christmas, but the busiest single day was by far the day income taxes were due. People put it off to the very last day. The day after, it was empty.

HST will probably have the same effect on the market for real estate as the tax deadline has on the market for stamps.

Michael

The HST directly affects new homes only. Having said that....Builders have already worked it into the price and will continue to do so like they did with GST.

Eliminating the 5% is a HUGE game changer however. My mortgage brokers tell me 90% of 1st time buyers buy with 5% down and 90% of recent mortgages were taken out with 35 year ammortizations. This proposal will remove a huge percentage of 1st time buyers from the homebuying market....keeping them in rentals and deflating the high priced real estate balloon, just as it is intended to do. Better quality tenants for everyone!!!!!!!!!! Hip Hip Hurray! A knife in our economy`s heart since it is one of the few sectors which has kept our economy rolling thru this recession.

Thomas Beyer · Dec 25, 2009

QUOTE (luckyluciano @ Dec 25 2009, 12:29 PM) The HST directly affects new homes only. Having said that....Builders have already worked it into the price and will continue to do so like they did with GST.
true .. but old homes/condos trade at a discount to new ones and as such are affected as well .. indirectly !