Down Payment Requirements
Effective February 15th, 2016, the minimum down payment for a mortgage will increase from 5% to 10%. The key point to note about this is the 10% only kicks in once the property exceeds $500,000. The 5% minimum down payment for properties up to $500,000 remains unchanged. Properties that are $1,000,000 plus also remain unchanged and require at minimum of 20% down. Chart below....
This change will certainly have an impact on the market. Time will tell of the exact impact but most likely we can see the market slightly cool because buyers will need to come up with a bit more cash if the property they want is between $500,000 - $999,999.
Applications have to be submitted to the lender for approval prior to Feb 15, 2016. The purchase closing date can be after Feb 15, 2016.
We could see a surge in properties (condos in Vancouver) up to $500,000. That doesn't mean we'll see more inventory overall but quite possibly in the first 45 days of 2016 for properties valued $500,000 - $1,000,000. Some buyers may not be able to break the $500,000 threshold. Buyers that do have a healthier down payment will have an advantage in competing offer situations for the properties listed close to $500,000.
This won't fare well for homes between $500,000 - $999,999. The amount of buyers able to purchase in this range will decrease. I don't think it will have a large impact around the $600,000 mark but anything over that buyers will either have to reduce their budget and/ or make a sacrifice on the property they would've qualified for or they have wait to save up some more. For those buyers renting, this could lead to more time out of the market which is not a good thing because more rent will be paid and home prices are rising.
Buyers and Sellers with
As I said. time will tell how this will impact our market.