January 17th, 2011.
The Federal government has made some changes to mortgage qualification which will go into effect in March. Important to note that for now, rates stay the same.
Finance Minister Jim Flaherty cracked down on Canadians' ability to qualify for a mortgage, in the government's latest attempt to rein in consumer debt.
Flaherty announced Monday the government is reducing the maximum amortization period for government-backed mortgages to 30 years from 35 years. The change will affect mortgages with loan-to-value ratios over 80 per cent.
Canadians will only be able to borrow up to 85 per cent of the value of their homes, down from 90 per cent.
Flaherty said the changes are designed to prevent the kind of housing bubbles that developed in other countries, most notably in the United States, where the collapse of the subprime mortgage market triggered the global financial crisis.
While this may seem like a negative, my feeling is that long term this is actually good news. No one wants a scenario developing in Canada like we saw south of the border in 2008. Aiming for a 25 year amortization should be the goal in any case, not 35 years !
Tighter federal mortgage rules may squeeze some potential homebuyers out of the market but are not expected to drastically affect prices, say Greater Victoria real estate officials.
Victoria Real Estate president Dennis Fimrite said Monday he does not think the changes will have a huge impact. "We are always disappointed when it makes it tougher, especially for first-time home- buyers, to purchase a home. But the changes that they've made aren't dramatic," said Fimrite.
He expects prices to be similar to last year's.