If the government makes changes that will affect the mortgage market, such as lowering the amortization option from 35 years to 30 years or increasing the down payment amount needed to make a purchase, we believe the market will take a serious step backwards.
Researchers, economists and the Bank of Canada themselves seem to be actively supporting the mortgage market as it is and are not recommending changes that could see the recovery stopped in its tracks.
The changes announced by the Department of Fincance on February 16, 2010 are pretty straight forward:
• a 20% minimum down payment on rental properties will be required - this does not affect 2nd homes or vacation properties,
• that refinancing can only go to 90% of the value of your home rather than 95% and,
• that to qualify for a variable rate mortgage they will use the 5 year fixed rate rather than the 3 year fixed rate that has been used previously - which will affect only those buyers who are stretching their approval to the maximum allowed,
In our opinion, these changes will solidify the current recovery and set the stage for a more stable market down the road without noticeably affecting the economic recovery.
July Mortgage & Finance Statistics
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June Mortgage & Finance Statistics
Bank of Canada raises Variable Rates by 0.25%
