CMHC boss Evan Siddall sees merit in doubling minimum home down payments from five to 10 percent

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      Right now, anyone who wants to buy a home only has to put down five percent of the sales price.

      Canada Mortgage and Housing Corporation president and CEO, Evan Siddall, however, says "there is merit" in reassessing this rule.

      Over Twitter, he stated that 10 percent down payments would "provide more cushion", given high debt levels.

      Siddall made the comment at the end of a tweetstorm in which he predicted housing prices would fall nine percent, on average, if there's a prompt COVID-19 recovery.

      In a "worse than expected" situation, prices could fall 18 percent, he added.

      Those who put down less than 20 percent on a home must purchase mortgage default insurance.

      It's usually bought from CMHC, which is owned by the federal government.

      Last year, CMHC provided 100,000 households with mortgage insurance, according to its website.

      The Crown corporation's annual report reveals that $2.6 billion of its $4.7 billion in revenues were derived from mortgage insurance and mortgage funding.

      By the end of last year, it held $12.1 billion in equity through its mortgage insurance.

      Currently, 12 percent of mortgages are in deferral, according to Siddall's tweetstorm, but that could reach 20 percent by September.

      Siddall also mentioned rising debt levels, which is why the Crown corporation "must consider systemic as well as business risks".

      Siddall has already indicated that he'll be leaving his position later this year. In the past, the federal finance minister has set the rule around minimum down payments for homes in Canada.

      The call for higher down payments isn't new. As far back as early 2010, an unnamed source told the Globe and Mail that bankers would be happy if the minimum were to be boosted to 10 percent. 

      On January 1, 2010, CMHC mortgages were required to be reported on the balance sheets of banks.

      In advance of this occurring and following the global economic meltdown in 2008, the Conservative government instructed CMHC to buy mortgage-backed securities from banks.

      By 2010, the total federal buyback had reached $69 billion, according to Hilliard MacBeth's 2015 book, When the Bubble Bursts: Surviving the Canadian Real Estate Crash.

      MacBeth cited this to advance his argument that the federal government had actually bailed out Canadian banks during the 2008 financial crisis—even though this was never explicitly acknowledged by then prime minister Stephen Harper and then finance minister Jim Flaherty.