Monday, December 21, 2009

New home buyers may face down-payment hike

TORONTO–CTV says Ottawa is considering raising the minimum down payment for home buyers as well as reducing the amortization period in order to stop some consumers from taking on too much debt.

In an interview with CTV Question Period, to be aired next week, Finance Minister Jim Flaherty says the measures will be taken if there's evidence of excessive demand in the housing market.

Flaherty says that the new measures would target consumers "who are taking on obligations that they will not be able to handle in the future when the interest rates do rise."

He says the likely measures the government will take is to increase the size of the down payment from five per cent "to a higher figure" and to reduce the amortization period "from a maximum of 35 years to something less."

Those measures would increase the monthly payments, making it more difficult for some people to take on a mortgage and purchase a home, without having to increase the interest rate.

Last week, the central bank warned that when interest rates rise to normal levels, up to 10 per cent of households could face difficulties in meeting monthly payment requirements.

note: It is a known fact, when home prices are under pressure, consumers tend to reel in the spending. Flaherty's warnings above are, in my opinion, more about creating contraction in consumer spending, than anything else.

Knowing why certain things are happening is as important as knowing when to get out or to get into the housing market. If you are a first time buyer and desire home ownership, then you had better be thinking about getting in soon. Give me a call if I can help.

John Prince, Alberta licensed real estate agent, Century 21 'The Professionals' (Crowsnest Pass). Serving the Crowsnest and area. Call me directly at 403-564-4518 or by email at:

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