Today’s changes to the Mortgage rules in Canada are not going to mean very much to the average borrower, you will still be able to buy a home with a 5% Down Payment and, if necessary you will still be able to stretch the amortization out to 35 years. This will allow many first time buyers (aka the bottom of the Real Estate food chain) to own their homes after a few years of diligent money and debt management. Generally speaking this is a good thing for Canada and the Canadian economy, any policy change to major elements of our Home Financing system like a doubling of the Down payment requirements form 5% to 10% would, by all accounts have a devastating effect on the country’s economy as housing starts would slow drastically, values of existing homes would drop at the outset and many tradesmen would be thrown put of work. On the other hand, by lowering the re-financing ratio to 90% and raising the Down Payment requirement for non-owner occupied residential housing will cool some of the speculative frenzy in the market.
All in all a well thought out solution by the Government to a thorny problem.