How does this affect you?So we all woke up Monday morning in January to discover that Jim Flaherty added three new mortgage rules to the way that Canadians can borrow money. These changes came as concern issed by the Bank of Canada that Canadian household debt levels were reaching all time highs.
These are the 3 changes that will affect every Canadian from March 18, 2011 going forward.
1)Reduce amortization period from 35 to 30 years. yes it will become more expensive to finance your home purchase, but in perspective if you have a $300,000 mortgage at a 5yr fixed rate the difference in payment will only be $100. If $100 is enough of a difference for you to no longer afford your home, then maybe you are buying something you can't afford. This rule won't have a overall impact on the market.
2) Maximize amount Canadians can refinance from 90% down to 85% of the value of the house. Directed at preventing homeowners from using their homes as ATM. No impact on the real estate market.
3) No longer insuring Home Equity Lines of credit(HELOC). Canadians were using these credit lines as ATM which is the biggest concern for the government. No impact on the real estate market, direct to current homeowners.
With talks of a rate hike in February and March and the new change in the mortgage rules me may see a surge in activity that should of been a very slow time in the year for real estate.
The best thing do to going forward is to call your Realtor or bank and have then lock in a rate if you're looking to purchase in the next 120 days.
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