On July 7th, the Government of Canada announced changes to protect and strengthen the Canadian housing market. The changes were deemed necessary to minimize the risk of a US-style housing bubble developing in Canada.
Adjustments were made to the rules for government guaranteed mortgages. That is, high ratio mortgages insured through CMHC, Genworth, or other insurance providers. The changes included:
* Fixing the maximum amortization period for new government-backed mortgages to 35years;
* Requiring a minimum down payment of five per cent for new government-backed mortgages;
* Establishing a consistent minimum credit score requirement of 620;
* Introducing new loan documentation standards.
The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire.
Recently, Darren Thompson, VP of ResMor Trust appeared on the business news channel BNN during their 4:30 daily business wrap-up show. He talked about the changes and a survey his company conducted with Canadians on the subject. To view the clip, click here: http://watch.bnn.ca/wednesday/#clip73722 (at the 28:30 minute mark).
To view the results of the ResMor survey, click here: New Rules Survey
Thursday, August 14, 2008
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