The federal government is officially looking to toughen financing requirements for real estate investors.

Through the Canada Mortgage and Housing Corporation, the feds intend on reviewing down payment structures in a bid to remove speculators and investors, whom it appears they blame for rapid price appreciation, from the market.

According to the founder of Butler Mortgage, it’s about time—and he believes it’s going to happen. Monumental home equity gains have persuaded buyers in the market not to sell the homes they live in and instead finance their new purchases using existing home equity.

“They’re going to do something to prevent people from acquiring or retaining rental properties,” Ron Butler surmised. “It used to be that you sold the condo you’re in and used the proceeds towards a down payment on a bigger townhouse, and the world marched on, but for the last 18 months that hasn’t been the case. People think they can’t sell their condo now because it keeps going up in value, so they just extract money from the condo because its value will rise infinitely, and buy that townhouse with borrowed money. They’re refinancing their current homes and proceeding to buy more properties.”

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