The Short Version
The Federal Government has taken some steps to protect consumers buying homes now so they
will be able to make payments when rates go back to their long term average of about 6%.
Highlights – Not Much Has Changed:
1. All borrowers will qualify at the 5 year rate – from 3.79% to 4.09% - which is where we
have been qualifying buyers for the last 4 years anyway.
2. People refinancing can only withdraw a maximum of 90% of the appraised value of their
home. Most of our refi’s are at 80% so this does not affect most of our clients.
3. 20% down is now needed for investment properties that are not owner-occupied. Most
clients put 20% down anyway so this does not change much for investors either.
4. Amortization period and down payment remain unchanged at 35 years max and 5% down
The Detailed Version - Government of Canada Takes Action
“Canada's housing market is healthy, stable and supported by our country's solid economic
fundamentals," said Minister Flaherty. “Our Government is acting to help prevent Canadian
households from getting overextended, and acting to help prevent lenders from facilitating it."
The Government will therefore adjust the rules for government-backed insured mortgages
as follows, and are effective April 19, 2010:
1. Require that all borrowers meet the standards for a five-year fixed rate mortgage even if
they choose a mortgage with a lower interest rate and shorter term. This initiative will
help Canadians prepare for higher interest rates in the future.
2. Lower the maximum amount Canadians can withdraw in refinancing their mortgages to
90 per cent from 95 per cent of the value of their homes. This will help ensure home
ownership is a more effective way to save.
3. Require a minimum down payment of 20 per cent for government-backed mortgage
insurance on non-owner-occupied properties purchased for speculation.
Mark noted the above in the Calgary Sun a few weeks ago. See attached.
• 5-year, fixed rates now range between 3.79% and 4.09% - the lowest in about 70 years.
• Variable rates are Prime-0.35%, or 2.25% - .35% = 1.90% AND you can lock-in at best
bank rates before rates go up. Banks lock you in at Posted - 1% = 5.65% -1% = 4.65%!