I read this interesting article earlier this week in the Globe and Mail. The basic premise is what might happen if the federal government decided to make purchasing a home more expensive by requiring much higher down payments – essentially, getting rid of the five per cent down payment. The author goes through the scenarios, imagining tumbling house prices as first-time buyers are pushed out of the market, climbing rental rates, less lender choice and higher mortgage rates.
Ultimately, the government is unlikely to raise the minimum down payment any time soon. It can, however, be interesting to contemplate what might happen.