Canada Mortgage and Housing Corporation will not be offering mortgage insurance on loans for condo projects and on luxury homes. The changes will start to take place on July 31, 2014 for homes that are worth more than $1 million. For multi-unit condo projects, the changes will be effective immediately.
According to the Calgary Real Estate Board chief economist, Ann-Marie Lurie, these changes won't significantly impact the luxury market in Calgary. People that were buying high-end homes were already required to place a 20% down payment on the property and these homes did not require insurance. The federal finance minister announced2 years ago that the CMHC wouldn't be insuring mortgages on luxury homes if more than 80% of the home’s value was borrowed.
As well, it's not expected that this change will have a large impact on the overall sales activity in the city. Luxury homes only account for a small portion of the real estate market in Calgary.
The changes that are taking place for multi-unit condo construction will only affect the developers. Condo buyers will still have access to mortgage insurance from CMHC. The insurance changes for condos don't apply to the products and services offered by private mortgage insurers.
It's been another record-breaking year for luxury sales and it's expected that this trend will continue with or without mortgage insurance from CMHC. The market for luxury homes in Calgary has been thriving for the last two years. So far in 2014, up until the end of May, 359 homes worth more than $1 million have changed hands. This represents 3% of the total overall sales volume in the city.