The Government of Canada announced adjustments to the rules for government-backed insured mortgages. The move was designed to support the long-term stability of Canada’s housing market and support saving through home ownership.
The new measures:
- 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 per cent.
- Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes.
- Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit.
The adjustments to the mortgage insurance guarantee framework will come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.
The Canadian Real Estate Association (CREA) issued a statement following the announcement of the new rules noting it, “that recognizes the government is trying to take reasonable and responsible action with respect to household debt, but urges the government to refrain from additional measures until it can fully evaluate and assess the impact of today’s announcement.”
For more information visit the Government of Canada’s press release.