Mort­gage changes un­likely to im­pact lo­cal mar­ket

Winnipeg Free Press - Section G - - THE GREEN PAGE - By Mike Moore

LAST week, Fi­nance Min­is­ter Bill Morneau an­nounced changes to the rules for gov­ern­ment­backed mort­gage in­sur­ance. Ef­fec­tive Feb. 15, 2016, the min­i­mum down pay­ment for new in­sured mort­gages will in­crease from five per cent to 10 per cent for the por­tion of the house priced above $500,000. The five per cent min­i­mum down pay­ment for prop­er­ties up to $500,000 re­mains un­changed. What does this mean? For one, it means the fed­eral gov­ern­ment is tar­get­ing the Toronto and Van­cou­ver hous­ing mar­kets, which have been on fire lately. In Novem­ber, Toronto had al­ready beaten its yearly record for sales. In Van­cou­ver, sales were up 40 per cent over last year with prices in­creas­ing by 17.2 per cent. The fear is this kind of growth in Canada’s largest ur­ban cen­tres is un­sus­tain­able. The hous­ing pres­sure on th­ese two mar­kets comes at an in­ter­est­ing time. Per­ma­nent im­mi­grants have in­creased to 240,000 over the past year, while provin­cial mi­gra­tion has in­creased from com­mod­ity-pro­duc­ing re­gions that have fallen on hard times. Al­though there will be im­pact felt here in Man­i­toba, it won’t be as pro­nounced as in Toronto or Van­cou­ver. For one, our av­er­age prices of both new and re­sale homes are well un­der $500,000. For the buy­ers of th­ese homes, noth­ing changes. In the case of those pur­chas­ing homes over $500,000, it is not fair to as­sume that if some­one is buy­ing a home at that price, they must have ad­di­tional money. In some cases, a larger home is nec­es­sary to ac­com­mo­date a larger fam­ily. This may be for the num­ber of chil­dren liv­ing there or to care for par­ents who need to move in with their chil­dren for health rea­sons or where a care home is not an op­tion. The first-time home buyer in Man­i­toba will gen­er­ally not be im­pacted by th­ese changes; how­ever, they definitely will be in Toronto and Van­cou­ver, where av­er­age home prices are well in ex­cess of the listed fig­ure. All lev­els of gov­ern­ment need to work with in­dus­try to re­move bar­ri­ers that neg­a­tively im­pact first-time buy­ers. Dur­ing the im­ple­men­ta­tion of the new rules, all ef­forts should be di­rected to as­sist the first-time buyer. In the short term, the changes to the rules for gov­ern­ment-backed mort­gage in­sur­ance may ac­tu­ally stim­u­late the higher priced home mar­ket, as buy­ers who have been con­sid­er­ing home pur­chases in ex­cess of $500,000 de­cide to do so prior to the new rules com­menc­ing next year.

Mike Moore is pres­i­dent of the Man­i­toba Home Builders’ As­so­ci­a­tion

KEN GIGLIOTTI / WIN­NIPEG FREE PRESS FILES

The min­i­mum down pay­ment for new in­sured mort­gages will in­crease from five per cent to 10 per cent for the por­tion of the house priced above $500,000.

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