Changes to Mortgage Rules and What It Means to YOU


Changes to Mortgage Rules and What It Means to YOU:

he Harper Government Takes Prudent Action to Support the Long-Term Stability of Canada’s Housing Market The Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market and support hard-working Canadian families saving through home ownership.

“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”

“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”

The new measures:

  • Reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
  • Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
  • Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.

Our Government’s ongoing monitoring and sound underlying supervisory regime, along with the traditionally cautious approach taken by Canadian financial institutions to mortgage lending, have allowed Canada to maintain strong and secure housing and mortgage markets.

The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.

Source: Department of Finance Canada

What these changes mean for sellers & buyers like YOU:


  • Come March 18, 2011, Buyers will have a lesser price range to work with. This means that if they are looking for a bigger home in a desirable neighborhood, , they might have to settle for something less. * Entry level homes will be very attractive to buyers as it will fit in their budgets better.

  • Sellers who are sellling luxury properties might have to wait longer for their property to sell if the property is not priced aggressively.

  • It will be tougher for buyers who want to use the equity of their home to purchase an investment property.

Feel free to contact me for any questions.

Yours in service,
Oliver Po

Century 21 In Town Realty
421 Pacific St.
Vancouver, BC V6Z 2P5
Cell 778-898-5153
Bus 604-685-5951
Fax 604-685-2807

Do you have family and friends who are thinking of buying or selling real estate?
I would be glad to assist them. Thank you for your referral.

This communication is not intended to cause or induce breach of an existing agency agreement.