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Mortgage Insurance Rule Changes - The Federal Govenernments Alternative To Raising Interest Rates!!

Mortgage Insurance Rules are changing!  Finance Minister Jim Flaherty has unveiled some new rules and we have outlined them below to help you. 

In keeping you up to date with today's changing market, we thought you would like to know that Finance Minister Jim Flaherty has unveiled three new rules:
 

Mortgage amortization periods will be reduced to 30 years from 35 years on insured mortgage loans
---
 
The maximum amount Canadians can borrow to refinance their owner occupied property will be lowered to 85 percent from 90 percent.
---
 
The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.
 
 

The change in amortization and refinance borrowing limits will go into effect on March 18, 2011 and the change in insurance on home equity lines of credit will go into effect on April 18, 2011.  (but expect some Banks to implement the changes immediately)

The first change is likely to have the largest impact. Buyers who purchase a home to owner occupy with less than 20 percent down payment are required to purchase government-backed mortgage insurance. (5% down still existings for buyers*) 

Under the new rules, mortgages amortized over longer than 30 years will no longer qualify for that insurance, making it effectively impossible to get a highly leveraged mortgage of more than 30 years in Canada.

*5% Down Still Exists - While Flaherty called the changes "moderate," they did not include an increase to the five per cent minimum down payment Ottawa requires for a home purchase. They also stopped short of a proposal that surfaced last week which would have required 100 per cent of condo fees to be included in the list of expenses that are measured against income when financial firms consider a mortgage candidate. Currently, only 50 per cent must be included.

 The ratio of household debt to disposable income has reached 147 per cent and household debt has reached $1.4 trillion.

The International Monetary Fund has called household debt the number one risk to the Canadian economy.

According to the Financial Post's recent article by Paul Vieira, analysts at Scotia Capital suggested government regulation was the way to go in terms of curbing household appetite for credit as opposed to the Bank of Canada raising interest rates, which they said would be "imprudent" at this time. Read More

http://www.cbc.ca/money/story/2011/01/17/flaherty-mortgage-changes.html

Should you have any questions or need any help please give us a call.  Sutton Group Realty Systems is here to help!

 Mississauga 905 896 3333 or Toronto 416 896 3333

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http://www.searchtorontohomes.com

 

In keeping you up to date with today's changing market, we thought you would like to know that Finance Minister Jim Flaherty has unveiled three new rules:
 


Mortgage amortization periods will be reduced to 30 years from 35 years on insured mortgage loans
---
 
The maximum amount Canadians can borrow to refinance their owner occupied property will be lowered to 85 percent from 90 percent.
---
 
The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.
 
 

The change in amortization and refinance borrowing limits will go into effect on March 18, 2011 and the change in insurance on home equity lines of credit will go into effect on April 18, 2011.  (but expect some Banks to implement the changes immediately)

The first change is likely to have the largest impact. Buyers who purchase a home to owner occupy with less than 20 percent down payment are required to purchase government-backed mortgage insurance. (5% down still existings for buyers*) 

Under the new rules, mortgages amortized over longer than 30 years will no longer qualify for that insurance, making it effectively impossible to get a highly leveraged mortgage of more than 30 years in Canada.

*5% Down Still Exists - While Flaherty called the changes "moderate," they did not include an increase to the five per cent minimum down payment Ottawa requires for a home purchase. They also stopped short of a proposal that surfaced last week which would have required 100 per cent of condo fees to be included in the list of expenses that are measured against income when financial firms consider a mortgage candidate. Currently, only 50 per cent must be included.

 The ratio of household debt to disposable income has reached 147 per cent and household debt has reached $1.4 trillion.

The International Monetary Fund has called household debt the number one risk to the Canadian economy.

 

According to the Financial Post's recent article by Paul Vieira, analysts at Scotia Capital suggested government regulation was the way to go in terms of curbing household appetite for credit as opposed to the Bank of Canada raising interest rates, which they said would be "imprudent" at this time. Read More

 

 

http://www.cbc.ca/money/story/2011/01/17/flaherty-mortgage-changes.html

Posted: Wednesday, January 19, 2011 10:38 AM by Sutton Realty
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