Since the 2008 recession, Ottawa has made mortgage policy changes six times. In addition to the recent changes outlined above, here’s a timeline of changes.
OSFI requires smaller banks to perform a stress test requiring low equity borrowers (less than 20 per cent down payment) to qualify for the Bank of Canada’s posted five-year rate; and borrowers with a down payment at or above 20 per cent (low ratio) to meet these same eligibility requirements.
The federal government increased the minimum down payment for insured high-ratio mortgages for anyone buying a home valued between $500,000 - $1 million to 10 per cent down from 5 per cent down.
The maximum amortization period was reduced to 25 years from 35 years for high-ratio insured mortgages. A new stress test was implemented. To qualify for a high-ratio mortgage, a home buyer’s debt costs could be no more than 44 per cent of their income. Home owners refinancing could borrow a maximum of 80 per cent of a property’s value, down from 85 per cent. Government-backed insured high-ratio mortgages were available only on homes valued at less than $1 million.
The government reduced the maximum length of an insured high-ratio mortgage to 30 years from 35 years. The maximum amount home owners refinancing could borrow was reduced to 85 per cent from 90 per cent.
The government lowered the maximum amount home owners could borrow when refinancing a mortgage to 90 per cent of a home’s value, from 95 per cent. A new rule required owners not living on a property to have a minimum 20 per cent down payment if they needed government-backed mortgage insurance.
Then Finance Minister Jim Flaherty reduced the maximum length of an insured high-ratio mortgage to 35 years from 40 years.
***As noted from the Real Estate Board of Greater Vancouver Website***
Link to site and article: http://www.rebgv.org/federal-government-actions-curb-housing-risks-2008
If you will be effected and will need some help in finding a home quickly before the new mortgage requirements are implemented on January 1. Please contact me at firstname.lastname@example.org or by mobile: 604-512-9208.
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