The Latest in Mortgage News: CMHC to Review Investment Property Down Payments

CMHC to review investment property down payments
Written by Publishing Team

It’s no secret that the federal government is looking at reforms in investment property in an effort to help drive up runaway home prices.

In an authorization letter sent by the prime minister in December, Housing Minister Ahmed Hussain was specifically directed to “review down payment requirements for investment properties” and put in place policies to “limit excess profits” in this residential sector.

In 2021, more than a quarter of all home purchases were made by buyers who already own a home—investors in many cases—according to data from Teranet.

The Government of Canada announced today that it will be making a ‘major’ housing announcement on Thursday, with the Minister for Housing, Diversity and Inclusion and the Minister responsible for CMHC in attendance.

Some speculate that the announcement may be related to changes in down payment requirements for investment properties.

Owner-free rental properties in Canada with up to four units currently require a down payment of at least 20% by most lenders.

Mortgage expert Rob McCallister told Finance Post On Wednesday, a five percentage point increase to the minimum down payment is likely to “incrementally” slow investment purchases, while implementing a 35% minimum down payment would “significantly slow” such purchases. .

He added that regulators could also apply restrictions on the use of borrowed money, such as home ownership lines of credit, to fund down payments.

The announcement will be made at 11 AM ET and will be broadcast live here.

Jason Ellis appointed CEO of First National

Having held various positions at First National for nearly 18 years, Jason Ellis has been appointed as the company’s new CEO as of today.

Ellis, who first joined the company in 2004, has served as Chief Operating Officer since 2018 and in 2019 added the title of President.

Outgoing CEO Stephen Smith, who has held this position since First National’s IPO in 2006, will continue to provide strategic advice and direction to management in a newly created role as CEO.

Smith founded First National in 1988 with Moray Tawse, which grew the company into one of Canada’s largest non-bank mortgage originators with $121 billion in mortgages under management.

“Jason is uniquely qualified to lead First National as my natural successor,” Smith said in a statement. “Handing off the baton to Jason is something I am happy to do because I know it will take First National to the next level of achievement for the benefit of our employees, customers, partners and shareholders.”

BC saw record sales in 2021

More than 124,800 housing units were traded in British Columbia in 2021, according to final 2021 figures released by the British Columbia Real Estate Association (BCREA).

That’s a 33% increase from 2020. Meanwhile, the median MLS housing price in the county was $927,877, an increase of nearly 19% from the previous year. In three of British Columbia’s largest markets, the median home price is now over $1 million.

“Last year was a record year for home sales in British Columbia, with seven market regions hitting new highs,” BCREA chief economist Brendon Ogmundson said in a statement. “The listing activity couldn’t keep up with demand throughout the year. As a result, we started 2022 with the lowest level of active listings on record.”

Total active listings are currently at a record low of just 12,179 units, down more than 41% from 2020.

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