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Will the minimum downpayment be increased from 5% down to 10% down?

General Trish Pigott 27 May

Rumour has it that the minimum downpayment is going to be increased from 5% down to 10% down.
Our (Dominion Lending Centres) Chief Economist, Dr. Sherry Cooper just spoke on this and a variety of other topics around the current Canadian housing and mortgage markets.  I am going to summarize the highlighted points that I think will be of most interest to you.
Minimum downpayment from 5%- 10%
Her thoughts on increasing the downpayment from 5% to 10%  is counterproductive.  This would slow housing even more!  Every part of the Government is doing everything it can to stimulate and encourage spending.  She said “this decision would be the wrong one”.   So we can only hope this does not happen.
This has been suggested for the reason being when a person purchases with the minimum 5% down, immediately an insurance premium is added on top of the mortgage, decreasing the equity available and increasing the loan to value.  Now let’s say we see values dip like most are expecting or projecting… by even the smallest amount – this client is in hot water, when time comes to renew or remortgage, they already owe more than this home is worth.
Housing Values
So far the price movements we have seen have been small!  It is mostly in the luxury market where we are seeing the biggest decrease.
In April we saw a  57% decline in sales, however we also saw a 55% decline in listings!
We are expecting some downward pressure on pricing in the near future but may not see it until the Fall/Winter of 2020/2021.  We MAY see house prices edge downwards by 5-10%, which again really depends where you are in the Country.
We do believe that there is pent up demand and feel strongly that it will be a busy Spring and Summer.
Where interest rates are headed?
She believes and we also believe that rates will remain very very low.  She said “I do not see the Bank of Canada raising rates this year or next”.
Dr. Sherry Cooper is forecasting a U shaped recovery, she is expecting  the 2nd quarter to be slow and it will be 2022 before the economy is back to where we were in 2019/2020.  What do you think?
What do we think?  We think that we have already seen the market take a turn for the best and the busiest over the past 2 weeks!  We are hoping for more of a V shaped recovery where it just shoots back up.