For CMHC insured mortgages - Main Changes:
1) Maximum amortization reduced to 25 years from the current 30 years.
2) Maximum loan-to-value for home equity loans reduced from 85% to 80%.
3) Maximum gross debt service allowed will be capped at 39% instead of 40%+ which many times got approved.
4) Maximum house price will be capped at $1 million for CMHC mortgages. So luxury home buyers will need at least 20% down from now on.
You can read more here: http://www.theglobeandmail.com/news/national/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/?cmpid=rss1
So the big question is, why?
Are these changes actually going to help the economy, or are they making it more difficult for people to get in to the market, thus hurting the economy?
Will these changes hurt our delicate housing market and also risk negatively impacting our economy, or are they positive changes? Everyone has a different opinion, but in the coming months we will soon find out.
I think there will be a mad scramble from investors to refinance their properties to pull out the cash to buy new properties. There will also be a mad scramble to buy houses before the rules come in to affect. Then things might die down a bit in the fall. We will have to see.
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