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.