Thursday, June 21, 2012
Finance Minister Jim Flaherty says clamping down on mortgage rules will save Canadians thousands of dollars as he confirmed four changes to the rules governing insured mortgages.
At a news conference in Ottawa, Mr. Flaherty confirmed that Ottawa will:
. reduce the maximum amortization period to 25 years from 30 years.
. The maximum amount of equity homeowners can take out of their homes in a refinancing is being reduced to 80 per cent from 85 per cent.
. The availability of government-backed mortgages will be limited to homes with a purchase price of less than $1-million
. The maximum gross debt service ratio will be fixed at 39 per cent and the maximum total debt service ratio at 44 per cent.
"I remain concerned about parts of the Canadian real estate market, particularly in Toronto, but not only in Toronto," said Mr. Flaherty. "This is a judgment call. This is not written anywhere in a book about when one intervenes and when one does not intervene, but my judgment is that we need to calm particularly the condo market in a few Canadian cities."