The following article from the Edmonton Sun is great news, looks like the minimum downpayment for a conventional (un-insured mortgage) will be lessened to 20% from 25%. Considering how much money CMHC took in last year alone, this is long overdue. When this will happen is yet to be determined.
Proposed cut in mortgage insurance will save first-time homebuyers ‘a chunk of money.’
The ceiling could be falling on the amount of money homeowners must put down on a property before mortgage insurance is mandatory.
The federal government has tabled new legislation that would allow consumers to buy homes with a 20% downpayment without having to buy mortgage insurance, down from the current level of 25%.
For a homeowner buying a $300,000 property with 20% down, the changes would save a purchaser $2,400 in mortgage insurance fees.
A federal finance official couldn’t estimate when the change might take effect because the legislation must be passed by both Parliament and the Senate before receiving Royal assent.
A federal election could derail any proposed changes.
However, the measure is being hailed as a welcome break for home shoppers, particularly first-time buyers.
"For people with 20% to put down, this is a godsend," said real estate lawyer Alan Silverstein, author of several mortgage advice books. "You’ll save a chunk of money."
However, Silverstein wonders whether insurance rates on mortgages where buyers put less than 20% down will rise to compensate for the lost fees.
"It’s possible that is what is going to happen," said Silverstein. "In other words, some will benefit and some will suffer. We just don’t know."
John Williamson, federal director of the Canadian Taxpayers Federation, says homeowners deserve a break on insurance fees.
"The Canadian Mortgage and Housing Corporation made a billion dollars last year," said Williamson. "It’s time to return some of that money to homeowners."
He says lowering the threshold to 20% from 25% makes more sense than "gimmicks" like 40-year amortization terms or 0% down mortgages with hefty fees.
"It’s far better to be providing help this way by easing the regulatory requirements on insurance," said Williamson.
