Canada's New Mortgage Rules

(Ontario Real Estate Source)

By Brian Madigan LL.B.

Jim Flaherty, Canada's Minister of Finance announced some changes to mortgage.

In an effort to reduce the risk of exposure to rising interest rates, the following changes have been made:

1) the maximum amortization for mortgages has been reduced to 30 years from 35 years, in cases where the loan to value ratio (LTR) exceeds 80%.

2) Refinancing will be limited to 85% LTR (presently 90%).

3) CMHC insurance will not be available for lines of credit, only line of credit mortgages used to finance acquisitions.

The new rules will not come into effect for about 60 days.

Genworth is not effected, but the major banks play an important role in financing the acquisitions of properties. More recently, the banks have been pushing secured credit lines rather than traditional mortgages. This trend is to be curtailed.

The secondary market will respond to the gap with increased rates.

In the very short term, some increased activity in the market may take place. However, by selected mid January, the new rules become effective at the time of the Spring market.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com