http://www.fin.gc.ca/n11/11-003-eng.asp
Ottawa, January 17, 2011
2011-003
THE HARPER GOVERNMENT TAKES PRUDENT ACTION TO SUPPORT THE LONG-TERM STABILITY OF CANADA’S HOUSING MARKET
The Honourable Jim Flaherty, Minister of Finance, and the Honourable Christian Paradis, Minister of Natural Resources, today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market and support hard-working Canadian families saving through home ownership.
“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”
“The economy continues to be our Government’s top priority,” continued Minister Paradis. “Our Government will continue to take the necessary actions to ensure stability and economic certainty in Canada’s housing market.”
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. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.
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. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.
Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.
Our Government’s ongoing monitoring and sound underlying supervisory regime, along with the traditionally cautious approach taken by Canadian financial institutions to mortgage lending, have allowed Canada to maintain strong and secure housing and mortgage markets.
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.
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For further information, media may contact:
Annette Robertson
Press Secretary
Office of the Minister of Finance
613-996-7861
Jack Aubry
Media Relations
Department of Finance
613-996-8080
.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Brilliant move by Flaherty and Harper.
Making maximum tenure of 30 years and only 85% of home value to be mortgaged will force people NOT to buy homes beyond their means and suffer.
This will also force people with genuine home buying capacity to come into market than speculators who will think twice before as the many of the first time home buyers will be not be there to buy the flipped property.
Good Job Conservatives.
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Sunny Leone a true Canadian DESI now back in India !.
does this apply to existing mortgage or only new?
RE-financing of existing mortgages also.
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Sunny Leone a true Canadian DESI now back in India !.
I like that.
Bring it down to even 25 years - good for everyone. However, still don't have any idea how it will affect my home re-financing.
Location: Western Hemisphere
Posted on: 17-01-11 13:38:10
I've always had only 25 year amortization. I guess, I can now go to 30 year and REDUCE my payment.... 
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Dimple2001
Quote:
Originally posted by febpreet
I like that.
Bring it down to even 25 years - good for everyone. However, still don't have any idea how it will affect my home re-financing.
If you want to do your home refinancing or want to take equity out, you can only do up to the 85% of the appraised/fair market value of your house, meaning you will get 5% less. So, if your house is presently valued at $400,000 and you have lots of equity there, you will get $20,000 less in equity take out. You could have refinanced up to $360,000 previously while with the new rules you could only refinance up to #340,000.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
