Lower down payment rules mean more Canadians likely to buy
a home: RBC survey
TORONTO, April 20, 2007 — One in five Canadians
is now more likely to buy a home, following today's announcement
by the federal government that it is lowering the minimum
down payment requirement for mortgage default insurance from
25 per cent to 20 per cent, according to research gathered
by RBC Royal Bank's 14th Annual Homeownership Survey.
The RBC survey, completed prior to the announcement, included
a question about mortgage default insurance in anticipation
of a legislative change. The new legislation within Bill C-37
affects all mortgages or loans on residential property and
requires that borrowers carry mortgage default insurance when
the loan-to-value exceeds 80 per cent. The previous 75 per
cent maximum loan-to-value had been in place for 40 years.
"We've immediately implemented this lower down payment
limit and are pleased to provide the additional savings to
our clients," said Catherine Adams, RBC Royal Bank's
vice-president, Home Equity Financing. "For example,
these savings can add up to approximately $2,000 for a client
with a typical $200,000 mortgage over 25 years, on a home
valued at $250,000."
The new limit also affects individuals who intend to refinance
their mortgages. The RBC survey found that 39 per cent of
Canadians have borrowed against the equity of their home,
by either refinancing their mortgage to a larger amount, or
by taking out a home equity line of credit.
"Concerns about additional insurance premiums meant
that many Canadians limited the amount they refinanced to
75 per cent of the value of their home," explained Adams.
"Now, with refinancing at 80 per cent, we're making an
extra 5 per cent equity available to our clients for their
financing needs."
According to the RBC survey, Canadians planning to buy a
home in the next two years estimate making an average down
payment of $52,111, with 21 per cent planning a down payment
of between $1 to $5,000.
The average mortgage in 2007 is $105,557 - a 10 per cent
increase from 2006 ($95,840). Meanwhile, Canadian homeowners
estimate the average market value of their homes has increased
by 22 per cent over the past two years, and an overwhelming
90 per cent believe that purchasing a home is a good investment.
These are some of the findings of an RBC poll conducted by
Ipsos Reid between January 18 and 22, 2007. The online survey
is based on a randomly selected representative sample of 2,404
adult Canadians. With a representative sample of this size,
the results are considered accurate to within ±2.0
percentage points, 19 times out of 20, of what they would
have been had the entire adult Canadian population been polled.
The margin of error will be larger within regions and for
other sub-groupings of the survey population. These data were
statistically weighted to ensure the sample's regional and
age/sex composition reflects that of the actual Canadian population
according to the 2001 Census data.
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Media contact:
Kathy Bevan, Media Relations, (416) 974-8810
For full tabular results, please see the Ipsos Reid website
at www.ipsos.ca.
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