Canadian Finance Minster, Flaherty, announced three changes to the rules for government-backed insured mortgages, designed to prevent the kind of problems that caused the U.S. housing market to collapse, triggering the global financial crisis.
The changes are:
- When applying for a mortgage you must qualify for a 5-year fixed rate mortgage, even if you are going to take a different rate or term.
- When re-financing you can only re-finance up to 90% of the value of your home (instead of 95%).
- Investors must put down 20% for government backed mortgage insurance on investment properties.
We feel these changes will help create a strong and healthy home owner. A small group of buyers may get squeezed out of the market place in the short term, but the buyers over the long term will be better positioned to withstand any future economic down turns and changes. This will help buyers to avoid financial issues like foreclosures.
If you would like to get into a home before these changes take effect don't delay. The rule changes come into force on April 19, 2010.