Posted By Peggy Hill on January 18th, 2011
It was announced yesteray, Monday January 17th 2011 that there will be a few adjustments in terms of rules for government backed insured mortgages. The changes have been made in an effort to support the long-term stability of Canada's housing market. The changes announced were:
- Reduction in the maximum allowable ammortization period from 35 years to 30 years, effective March 18.
- The maximum refinancing amount that Canadian homeowner's can borrow against will decrease from 90% of the value of your home to 85%.
- Lastly, the Federal Government will withdraw it's insurance backing on lines of credit secured by homes, such as home equity lines of credit or HELOCs.
What does this mean for the Real Estate market?
The change that will probably have the most direct impact on the housing market is the reduction in the maximum amortization period. This will result in higher monthly mortgage payments for the average Canadian and will consume more of the monthly budget. It will also create a barrier to entry for first time home buyers. In light of the recent downfall of the mortgage market in the United States these changes will protect the mortgage market and will help Canadians to pay off their mortgages faster while reducing total interest payments. The changes will moderate the current Real Estate market in the short term while ensuring that it is well supported in the years to come.
I hope that you find this information useful, please feel free to pass it along to any of your family and friends who may find it relevant. If you have any questions don't hesitate to contact me.
Sincerely,
Peggy Hill
Broker of Record
Direct: 705-796-8191
Office: 705-739-4455
