- Category: Economic
- Published Friday, December 11, 2015
- CTV News
The federal government is increasing the minimum down payment required to buy a home for more than $500,000 in an effort to cool the red-hot housing markets in Toronto and Vancouver.
Finance Minister Bill Morneau made the announcement in Ottawa on Friday.
"We are looking at ways to ensure our market is stable and we want to make sure people are making the appropriate decision as they buy a new home," Morneau said during a news conference.
The new regulations will increase the minimum down payment from five to 10 per cent on the portion of the home's price that's greater than $500,000.
The minimum down payment on the first $500,000 of the home's price will remain at five per cent.
Morneau said the changes will impact one per cent or less of the housing market.
CTV News first learned of the tightening of mortgage rules on Thursday.
Canadians who already hold mortgages will not be affected by the new rules, Morneau said.
The new regulations will come into effect on Feb. 15, 2016.
Under the new rules, a $700,000 home would require a minimum down payment of $45,000. The $45,000 would consist of a five per cent down payment on the first $500,000 of the home, added to a 10 per cent down payment on the remaining $200,000 of the home.
Under the old mortgage rules, that same $700,000 would require a minimum down payment of $35,000.
Morneau said the new mortgage rules specifically target the Toronto and Vancouver's housing markets, where "prices have been elevated."
"We want to make sure we create an environment that protects the people that are buying homes so they have sufficient equity in their home," he said.