Attention Bloggers,
Very important changes in relation to getting a mortgage.
As always, any questions don’t hesitate to call or e-mail me personally or leave your comments on my Blog and discuss with others.
T.
The Honourable Jim Flaherty, Minister of Finance, today announced a number of measured steps to support the long-term stability of Canada’s housing market and continue to encourage home ownership for Canadians.
“Canada’s housing market is healthy, stable and supported by our country’s solid economic fundamentals,” said Minister Flaherty. “However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing.”
The Government will therefore adjust the rules for government-backed insured mortgages as follows:
- Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
- Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
- Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
“There’s no clear evidence of a housing bubble, but we’re taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it,” said Minister Flaherty. “If some lenders aren’t willing to act themselves, we will act. These measures demonstrate the Government is committed to taking action when necessary to support the long-term stability of a sector that is so vital to our economy and the financial well-being of Canadian families.”
These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010.
I think it was a good move to base qualification on the five year posted rate. At BMO Bank of Montreal we have already adopted this standard. IMHO a good mortgage provider will make sure that your home is both affordable now and in the future.
This is a message from the Canadian Real Estate Association.(CREA)after the announcement was made this morning Tuesday February 16th, 2010
Timothy
CREA is pleased the government didn’t increase minimum downpayments or reduce the amortization period; their impact on housing markets are potentially deep & damaging.
CREA is of the view that the Canadian resale housing market is healthy. Banks and governments should be cautious interpreting recent statistics, since comparisons are being distorted by recessionary activity a year ago and the subsequent rebound.
Current trends reflect the release of pent up demand when buyers moved to the sidelines during the recession. Additionally, the HST in Ontario and British Columbia and coming interest rate increases will likely moderate activity and price gains beginning in the second half of 2010..
CREA’s analysis of housing activity on the Multiple Listing Service® Systems of real estate boards across Canada has emphasized that a number of temporary factors have been skewing average price comparisons. Its most recent forecast indicates that national activity and average price will decline in 2011.
Given these facts, we don’t believe further regulatory moves are required.