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New Mortgage Rules Now Official

Tougher Lending in Canada

Effective March 18, 2011, it will become harder to buy a new home or consolidate debt into your mortgage.
That's due to three new changes announced today by Finance Minister Jim Flaherty:
  1. A 30-year maximum amortization on insured mortgages over 80% LTV
  2. An 85% LTV limit on insured refinances
  3. Elimination of government insurance on secured lines of credit (aka., HELOCs)
Flaherty says these regulations are meant to "(encourage) hard-working Canadian families to save by investing in their homes and future."

Here is the full press release:

How will this affect the market and you?

It should stabilize prices and further prevent an over lending disaster like in the US. It will keep more highly leveraged speculators out of the market. It should keep rates lower because if rates increase and 30 year amortizations are all Buyers are allowed with less than 20% down, affordability for Canadians will become an issue.

Personally I am in favor of tougher lending laws as it protects home owners against a price crash and it protects Buyers from prices soaring beyond reason.

I also believe strongly in The Vancouver Real Estate Market and that lower monthly payments can be beneficial to first timers and people looking to own on limited salaries in an expensive city, so I would encourage Buyers to make their move before the new law so they at least have the option of a 35 year amortization.

The Canadian Real Estate Market is already very leverage today, hence the all time high prices, so slightly less leveraged prices should be good for the overall economics of the Real Estate Market.

Write with all questions, or call me anytime at 604.562.0532.