How new mortgage rules will impact Hamilton

Hamilton homebuyers won't likely feel any direct impact from new federal mortgage rules because most homes are still priced well below $500,000.

New mortgage rules affect buyers of homes priced higher than $500,000

New mortgage rules won't have much of a direct impact on Hamilton homebuyers, as more than two-thirds of the homes sold last year were for prices lower than a new downpayment threshold. (Daniel Acker/Bloomberg)

New federal mortgage rules requiring a higher down payment for homes priced more than $500,000 are intended to relieve some pressure in hot Canadian housing markets. 

But the rules, which take effect Feb. 15, aren't targeted at markets like Hamilton, despite how hot Hamilton housing has been. Most homes are still well below that price threshold.

Even though home prices have risen 88 per cent in central Hamilton over the last decade, the median price for a home there in 2015 was about $227,000.

The new rules will "impact a very small proportion" of homebuyers in Hamilton, said Diana Petramala, a housing economist at TD bank.

Buyers looking for a house higher than $500,000 are likely to be carrying equity from a previous home.

Most homes less expensive than $500,000

Less than one in three homes sold in Hamilton and Burlington last year sold for more than $500,000. 

Of the 15,862 residential sales tracked by the Realtors Association of Hamilton-Burlington, only 4,534 in the region sold for more than $500,000. 

Looking just at the city of Hamilton, there were 1,425 homes sold for more than $500,000. 

'More GTA buyers looking this way'

The rule works like this: 

For mortgages being insured by the Canada Mortgage and Housing Corporation, homebuyers will still be required to put a minimum of 5 per cent down on the portion of a house that costs less than $500,000.

But for anything more than that, they'll have to put a 10 per cent down payment.

Starting on Monday, CMHC will require a 10 per cent down payment on the portion of any mortgage it insures over $500,000. (CBC News)

Suzanne Boyce, a mortgage broker who owns the Personal Mortgage Group in Hamilton, says the change was "well thought-out." 

"Most people buying over $500,000 are on their second or third house, so have or should have enough equity in their previous home to be able to achieve 10 per cent to 20 per cent down payment," Boyce said.

"This change in down payment will be affecting the areas [government officials] are targeting to slow down, without slowing down the areas of Canada that need the growth," she said.  

But while the rules may not affect first-time homebuyers here directly, they may still experience some impact in the form of an even tighter market, said Hamilton realtor Jeff Bonner. 

The new rules "may send more GTA buyers looking this way into an already hot #HamOnt sellers' market," he said

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