CHANGES TO HIGH RATIO (CMHC INSURED) MORTGAGE REQUIREMENTS
Finance Minister Jim Flaherty is tightening mortgage rules to make it harder for people to buy or borrow on their homes. Flaherty says changes to CMHC rules will cut the maximum amortization period for mortgages to 25 years from the current 30 years. The changes will also limit refinancing loans to 80 per cent of the value of a home, from the current 85 per cent. The latest moves are part of a string of initiatives undertaken recently by the federal government to slow the accumulation of debt by Canadian households, which reached a record 152 per cent of income in the fourth quarter of last year. This will mark the fourth time Ottawa has tightened mortgage rules since 2008. Central bank governor Mark Carney has been warning for several years that some Canadians are getting in over their heads with debt, and that they could face problems once interest rates , which sits at historic lows, start rising or if there is a second economic crisis.
Finance Minister Jim Flaherty has announced the fourth round of mortgage restrictions in four years. Starting 18 days from now (July 9, 2012). In short this is what we know so far...
•Maximum Amortization being changed from 30 to 25 years
Additionally Limit the maximum Gross Debt Servicing (GDS) and Total Debt Servicing (TDS) to 39% and 44% respectively (Currently, GDS does not apply to qualified borrowers with credit scores of 680+), and
•Ban mortgage insurance on properties over $1 million.