new mortgage rules effective July 09 2012


Finance Minister Announces Mortgage Changes



Government Changes Affect Real Estate Sales

This morning, the Minister of Finance announced changes to the standards governing government-backed insured mortgages:

        the maximum amortization period was reduced from 30 years to 25 years; 

        the maximum amount Canadians can withdraw in refinancing their mortgages was lowered to 80 per cent from 85 per cent of the value of their homes; 

        the maximum gross debt service ratio was fixed at 39 per cent and the maximum total debt service ratio at 44 per cent; and

        the availability of government-backed insured mortgages was limited to homes with a purchase price of less than $1 million.

CREA has continually stressed the need to avoid changing the minimum down payment. Today’s announcement confirms Canadians will continue to be able to purchase a home with five percent down.

The changes announced today will come into effect on July 9, 2012. Details of the announcement can be found here.

In response to the announcement, CREA’s President Wayne Moen issued the following statement:

"We believe today’s announcement is a measured response to the government’s often stated concern about household debt levels and the housing market. That being said, we would remind the government that the re-sale housing makes a significant contribution to the economy, adding an estimated $20 billion in spin-off spending and over 165,000 jobs in 2012. 

Recent statistics from The Canadian Real Estate Association indicate that the national housing market remains balanced. The impact of measures like those announced today must be closely monitored to ensure they have the anticipated impact and don’t create a spillover effect and slow the economy. 

For these reasons, going forward, we would urge the government to consider the impact of further interventions in the market carefully."

Cameron Muir, Chief Economist for the BCREA made the following statement today in regards to this new change in mortgage standards:

The CREA announcement went on to state that REALTORS® and the government share a common interest in the value of homeownership and its contribution to the economy and the well-being of Canadians and our communities.

Property buyers and sellers should contact a REALTOR® if they are considering entering the housing or commercial real estate markets to better understand the impact of these changes in their communities.

CREA will monitor the impact of these changes and maintain a dialogue with the Department of Finance about any unforeseen consequences. 





Communications Department

This notice is being circulated on the Mandatory VIREB REALTOR® Member e-mail list, a service made available through REALTORLink®.


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Anu Gupta

Anu Gupta

Sales Representative
CENTURY 21 Coastal Realty Ltd.
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