issues and experts

Government lifts down payment minimum requirements

December 11, 2015
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The federal government has announced it will tighten its mortgage rules in a bid to cool housing markets in Vancouver and Toronto. SFU Beedie School of Business professor Andrey Pavlov says the move comes as prices in both cities “have for a while been completely out of line with fundamentals, and even more so lately. With oil prices seeing record lows, Canada is on the verge of an economic downturn, yet real estate in these two markets continues to climb.”

He adds: “The problem is that thanks to CMHC all taxpayers are exposed to losses if prices decline. This justifies requiring higher down payment requirements and other policies to cool off those two markets. Of course the only true solution is for CMHC to stop insuring mortgages in markets at risk.”

Andrey Pavlov, Beedie School of Business (available today by phone and email), 604.763.3696; apavlov@sfu.ca