A History of Jim Flaherty

A History of Jim Flaherty’s CMHC Manipulations to Artificially Dampen Housing Demand and Sabotage Toronto’s Housing Industry

JULY 2008

• Changed minimum down payment from 0% to 5%
• Changed the maximum amortization rate from 40 years to 35 years

FEBRUARY 2010

• 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

JANUARY 2011

• 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

JANUARY 2012

• 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.