Down payment hike will only squeeze out more first-time home buyers, a top mortgage insurer warns
Garry Marr | June 13, 2016 5:00 PM ET
The head of Canada’s second-largest mortgage-default insurer is warning against increasing the minimum down payment for buying a home.
Andrew Charles, chief executive of Canada Guaranty, whose owners include the Ontario Teachers’ Pension Plan, says a full roll out of the minimum down payment for government-backed insured mortgages to 10 per cent from five per cent will heavily impact first-time buyers while failing to alleviate some of the price stresses in the Vancouver and Toronto housing markets.
“The first-time home buyer market in Canada represents approximately 30 per cent of the entire housing market,” Charles said. “The insured segment of the market has a $1-million cap in terms of maximum. We take the view that increasing, or further penalizing, the first-time home buyer does zero or has minimal impact on price valuations in two specific markets.”