TORONTO, April 20 /CNW/ - 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
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.
For further information:
For further information: Media contact: Kathy Bevan, Media Relations,
(416) 974-8810; For full tabular results, please see the Ipsos Reid website at