Canada's Finance Minister, Bill Morneau, recently announced changes to the rules for government-backed mortgage insurance.
In the new year, home buyers may have to save up a little more for a down payment. The minimum down payment required to qualify for mortgage loan insurance will increase from five per cent to 10 per cent for the portion of the house priced above $500,000 but less than $1 million. For homes valued at $1 million or more buyers must still continue to have a minimum down payment of 20 per cent.
Canadians who already hold mortgages will not be affected by the new mortgage rules.
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Mortgage loan insurance is typically required by lenders if you have less than 20 per cent saved up for your down payment. It is offered either through the Canada Mortgage and Housing Corporation (CMHC), which is a Crown corporation and backed by taxpayers, or through one of Canada's two private insurers, Genworth and Canada Guaranty.
What do the new mortgage rules mean in dollars and cents?
According to CREA's National Average Price Map, the average purchase price of a Canadian home in November was about $456,000. But, residents of Vancouver and Toronto can attest that homes in this price range are hard to come by.