Regulators Should Look Into Increasing Minimum Down Payment On Homes

Canada’s federal real estate agency’s head said that regulators should look into ways they can have the minimum down payment required to purchase a home to be increased, in order to have the issue of affordability eased, and also lower any potential risk posed by the financial system.

The CEO and president of Canada Mortgage of the Canada Mortgage and Housing Corp., Evan Siddal, said that; although the politicians are willing to lend a hand to those purchasing homes for the first time, demand will be propelled by low down payments and cause the cost of housing to increase. The decision by the government to help first-time buyers will only end up hurting the buyers themselves.

The minimum down payment for a home worth more than $500,000 in Ottawa was increased to 10 per cent in the year 2015. In a speech made at the Bank of England’s office in London by Siddall, He said that the increasing of the minimum down payment has a great chance to help offset the impact of the low-level interest rate, which will motivate borrowers to take on additional mortgage debts. Additional to that, he said regulators should look into how they can impose a loan-to-income limit as that of the U.K and others.