Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules this morning, which are set to come into force on April 19th, 2010. This means the government will 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% from 95% 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% for government-backed mortgage insurance on non-owner-occupied properties.
There were no changes to down payment requirements or length of amortizations for owner-occupied residences.
Current 5 year terms 3.69% ($423 pr month)
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{ 3 comments… read them below or add one }
This is going to have a HUGE impact on buyers right away. I suspect sales will drop in May by half, June prices will follow with increased MOI.
Glad to see the government is keeping on top of this. It’d be a shame to see people lose their homes like they have in the states due to poor regulations.
Jason Luke – Coquitlam Real Estate
I really appreciate that our government is going to change mortgage insurance rules. There was a must to do it when we don’t want to get in the situation as it is in United States. It will be interesting to see when this rule comes to validation and its practical impact.
Take care,
Julie
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