u/BadGamblingAddiction

CMHC mortgage insurance is what allows first time buyers to get a property with a much smaller down payment than a lender would typically be ok with.

By insuring the mortgage (at the expense of the buyer) they make the bank comfortable with the buyer having a lower downpayment.

The main issue I see here is that it creates an artificial demand for properties by increasing the amount of buyers who would otherwise not quality. Buying a home with 5% down plus mortgage insurance means you basically have 0 equity and you're paying huge amounts of interest for the loan.

If someone struggled to even save 5% down, odds are that the mortgage is already pushing them to their financial limits, but CMHC allows them to buy something they likely shouldn't.

Its this artificial demand that drives up prices because you have financially over-leveraged people competing with financially responsible buyers.

Thoughts? Am I out to lunch here?

Have prices come down a lot? I feel like paying 2300 for a GTA 1.5 bedroom condo might be high now.

Assuming you have room to contribute to each. Is there a general income threshold where RRSP makes more sense because of the tax deferral? This is assuming this is for specifically retirement investing and also assuming I will reinvest the tax return from the RRSP.