Скачать или смотреть CMHC Changes Jan 18 2011

Flaherty Announces Changes to the Mortgage Rules.

Effective March 18th, getting a mortgage in Canada will become a little more difficult. Almost 12 months after announcing the previous reductions, two more rule changes are coming our way. The changes are only applicable to loans greater than 80% of value, that fall under the government back mortgage program through CMHC, Genworth and Canada Guaranty. There are 3 significant changes to the rules:

1. The maximum amortization for mortgage financing is being reduced from 35 to 30 years
2. Maximum loan amount to refinance your home is being reduced from 90% of value to 85% of value.
3. HELOC products will no longer be available through the government programs. Backing of HELOC products will be removed April 18th

These changes are being made in an effort to control the household debt levels in Canada. The changes will lead to reduction in prices in most markets as less First Time Homebuyers will qualify for the financing.

Keep in mind though, the reduction in amortization is not as significant as one would expect. On a $300,000 mortgage with a 5 year fixed rate, the amortization reduction will increase the monthly payment by $104 per month. The translates into approximately $4000 per year additional income needed to qualify. This is not overly significant but will affect some potential homeowners. Also remember, that for clients with good credit histories, the potential to qualify with higher debt service ratios is also possible. I think we could be thankful that the government did not increase the 5% minimum down payment requirement

The reduction in the limit allowed for refinances, as well as the removal of Home Equity Line of Credit (HELOC) products from the program is prudent as the growth in HELOC products double the pace in growth of residential mortgage products. As stated by Mr. Flaherty regarding the HELOC products - "That's particularly risky, some of those loans are not used to create housing in Canada. They are used to buy boats and cars and big-screen TVs. That's not the business mortgage insurance was designed for."
As I've stated several times in the past, "Don't panic". The changes are being made as an effort to control the debt levels in Canada in order to sustain an already stable economy in Canada. Canada continues to be the strongest economy in the world and many, many countries wish they had a housing market and banking system as strong as ours.

I'm sure there will be further announcements as the banks and mortgage lenders work through the changes. I will continue to bring you the headlines as they are made available.