Mortgage rules tightening up even further in Canada

[Elmore]

http://www.cbc.ca/news/business/story/2012/06/20/mortgage-rules-tightened.html

Motgages recently could be amortized over 35 years. They dropped it to 30 almost 18 months ago and today they are dropping it even lower down to 25 years. First time home buyers are going to have a tough time getting into the market. They are also dropping the upper limit that Canadians can borrow against their home equity from 85 per cent to 80 per cent.

Tough times ahead I suspect for those who bought in the last couple of years. The market is already flat and I think we will see values dropping in the 25% range putting many people underwater in their mortgages.

 

[PlayfulAlex]

I guess if you're not in the market yet, this is the time to save, save, save...it'll probably be a few years before we see things turn around, as something's gotta be done about the current condo-mania!

Thanks for the heads-up...

 

[Jethro Bodine]

Smart move by the finance minister to head off a potential crisis like they had/have in the US.
Here is Winnipeg our housing market has gone crazy in the past 6-8 years. Traditionally real estate had been a very poor investment here, with annual increase in housing prices around 2%. In the past several years the market has gone through the roof and housing prices are double what they were 10 years ago. With mortgage rates being so low and 35 year amortization terms, alot of people are buying well beyond their means or borrowing on all of the equity in their homes. One local economist was saying the other day that he estimates that even a 1 - 2% increase in mortgage rates would potentially put hundreds of Manitobans in jeopardy of losing their homes.

 

[twoblues]

The market is already flat and I think we will see values dropping in the 25% range putting many people underwater in their mortgages.

Not quite sure where you are seeing this "flat market". Sure, it's not sky-rocketing any more, but there are still plenty of homes changing hands (especially in my neighbourhood on the North Shore). It has barely slowed at all. The only market that has slowed is multi-million dollar homes.

It is a smart move to reduce the length of time you can amortize a mortgage. 35 years is excessive. Heck, 30 is excessive.

 

[newatit]

I have not had a mortgage in 20 years, realized the benefits of paying it off early and so did that. I had the standard 25 years mortgage but got into some business deals with a bit of cash, and madeit work to get out of the mortgage. Thirty five years is your work lifetime, and the interest paid is a large amount. not to mention that in my day, we all accepted interest rates of 13% as the norm. A raise in rates now with them being so low would be a catastrophe, for sure, but it is likely to happen. The other problem with low interest rates is that you can't easily earn money on your investments.