The Canadian government announced new Mortgage rules today (January 17th 2011). The new rules are intended to prevent the Canadian housing market from suffering the same problems that has led to the recent financial crises in many other countries. The new rules:
- reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 percent. This will make it effectively impossible to get a highly leveraged mortgage of more than 30 years in Canada.
- lower the maximum amount people can borrow in refinancing their mortgages to 85 percent from 90 percent of the value of their homes, which will help Canadians save through ownership.
- withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit.
The first two changes in amortization and refinance borrowing limits will go into effect on March 18th 2011, the change in insurance on home equity lines of credit will go into effect on April 18th 2011.
More details of the changes plus a rundown of the changes made in 2010 can be found here