Another Tightening of Mortgage Insurance Rules Would be Catastrophic for Québec's Real Estate Market

L'ÎLE-DES-SŒURS, QC, July 23, 2015 /CNW Telbec/ - The Québec Federation of Real Estate Boards (QFREB) is reacting to mortgage tightening scenarios outlined in the Financial Post newspaper. According to the article, the federal Department of Finance has been studying various proposals, including increasing the minimum down payment, which currently stands at 5 per cent, and reducing the maximum amortization period, which is currently 25 years.

A further tightening of mortgage insurance rules in Canada would be very damaging to Québec's real estate market. Far from being an overheated market, the residential real estate market in Québec has instead experienced a decrease in activity in the past four years (three sales decreases totaling a 12 per cent drop in sales from 2010 to 2014) and price stagnation for the past two years (the median price of single-family homes rose by only 0.4 per cent in 2013 and by 0.9 per cent in 2014).

"In Québec, the last mortgage tightening actions that took place in the summer of 2012 in which the maximum amortization period was reduced from 30 years to 25 years has already had the effect desired by the federal government, which was to cause a soft landing for the real estate market," said Patrick Juanéda, President of the QFREB Board of Directors. "An additional turn of the screw by Ottawa would be too much for Québec's housing market," he added.

Measures that would significantly hamper homeownership

Any measure that would directly affect the minimum down payment or the maximum amortization period would particularly hurt first-time buyers, who are the cornerstone of the province's real estate market, representing almost one third of all transactions according to QFREB estimates. It is important to remember that Québec's homeownership rate is ten percentage points lower than that of Canada's other provinces.

An increase in the minimum down payment required to purchase a property would delay, by several months, the purchasing decision of thousands of households who were planning to buy a home with a 5 per cent down payment and who have saved accordingly. They would no longer have the necessary funds to make a down payment.

A further reduction in the maximum amortization period would result in a significant increase in monthly mortgage payments. For example, reducing the maximum amortization period from 25 to 20 years would, on a $200,000 loan, result in a $160 increase in the monthly mortgage payment, and would necessarily squeeze out several thousand potential buyers.

Canada-wide actions to address local situations

Canada's residential real estate market varies significantly from one province to another and from one city to another. It is the very hot markets of Vancouver and Toronto that are responsible for the surge in prices across Canada and that are causing concern for the federal government. For example, according to The Canadian Real Estate Association (CREA), the increase in the average home price across Canada reached almost 10 per cent in June, but if we excluded Toronto and Vancouver from this calculation, the increase would be reduced to 3.1 per cent.

"Québec's real estate market is healthy and balanced," said Mr. Juanéda. "Measures that squeeze out first-time buyers will have significant economic and tax implications. Unlike the Toronto and Vancouver markets, the Québec real estate market needs some breathing room to catch up on its long-standing delay in its home ownership rate."

About the Québec Federation of Real Estate Boards

The Québec Federation of Real Estate Boards is a non-profit organization composed of Québec's 12 real estate boards and the close to 13,000 real estate brokers who are their members. Its mission is to promote and protect the interests of Québec's real estate industry so that the boards and their members can successfully meet their business objectives.


SOURCE Fédération des chambres immobilières du Québec

For further information: Manon Stébenne, Manager, Communications and Public Relations, 514-762-0212, ext. 157,


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