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A History of Jim Flaherty’s CMHC Manipulations to Artificially Dampen Housing Demand and Sabotage Toronto’s Housing Industry
- Changed minimum down payment from 0% to 5%
- Changed the maximum amortization rate from 40 years to 35 years
- Changed the maximum amount in refinancing a home from 95% to 90%
- CMHC insured buyers must qualify to borrow based on a fixed 5-year rate rather than a lower variable rate
- Changed the maximum amortization rate from 35 years to 30 years
- Changed the maximum amount in refinancing a home from 90% to 85%
- Eliminates CMHC insurance for home equity lines of credit
- Eliminated CMHC insurance on houses priced over $1.0 million
- Changed the maximum amortization rate from 30 years to 25 years
- Changed the maximum amount in refinancing a home from 85% to 80%
CUMULATIVE CHANGE TO BUYERS
- Over these 4 years, the CMHC changes cost high ratio buyers significantly more to own a home:
- A $300,000 mortgage at 3% with a 40 year amortization: $1071/month
- A $300,000 mortgage at 3% with a 25 year amortization: $1420/month
- This represents a 35% increase in cost of owning a home and forced buyers of a $300,000 mortgage to earn $13,088 more annually to qualify for the same loan 4 years earlier.
- When refinancing a home, the cumulative 15% reduction makes it more difficult for parents helping children with a down payment for their first home.
- Destroyed the high-end market in Toronto, Vancouver, Calgary, Montreal, and Ottawa by forcing $1.0 million home buyers to provide a $200K+ down payment which even for high-earning couples could take 10 years to save, decimating the $1-2 million marketplaces in Canada, and specifically the high-end condo market.