Sunday, April 18, 2010

Mortgages: changing the rules

Tighter regulations, higher rates coincide with busiest season

With the Canadian residential real estate market in what are historically its two busiest months, April and May, events may play out a little differently this year. The rules of the mortgage game have changed.

Two months ago, Federal Finance Minister Jim Flaherty announced three rule changes that take effect on April 19:

•All borrowers must meet the standards for a five-year, fixed-rate mortgage, even if they choose a variable mortgage with a lower rate or a shorter term.
•The maximum Canadians can withdraw when refinancing their mortgages drops to 90 per cent of the value of their home, from 95 per cent.
•Buyers must make now a minimum 20 per cent down payment — up from five per cent — to qualify for Canada Mortgage and Housing Corporation insurance for non-owner-occupied properties purchased as an investment.
•The aim is to prevent homebuyers from getting into financial difficulty as mortgage rates rise.
"We want to discourage the tendency some people have to use a home as an ATM, or buy three or four condos on speculation," Flaherty said at the time.

Source: CBC News
Last Updated: Friday, April 16, 2010 | 10:30 AM ET

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