Greetings Everyone,
Today there was a significant announcement made by Jim Flaherty, the Canadian Federal Minster of Finance in regards to mortgage rules in Canada.
The announcement outlined 3 ‘changes’ to the Canadian mortgage industry. These changes, as explained by Jim Flaherty were a proactive move on the part of the Canadian government in order prevent a potential housing bubble in Canada.
Although I do not agree with all of the comments made by Jim Flaherty today with respect to these recent changes, I think that this is an excellent move on the part of the Canadian Government.
This announcement is yet again another demonstration of Canada’s prudent fiscal policy. It is decisions such as these made by the Canadian Government that help to keep Canada a fiscally responsible country.
The Canadian Broadcasting Channel put out an article today that outlines the 3 recent changes to the Canadian Mortgage industry. I recommend you read this article, and watch the accompanying video.
For your reference, the 3 changes announced by the Canadian Governement with respect to the mortgage industry are:
1) Borrowers need to be able to qualify for a mortgage based on the 5 year fixed mortgage rates. Despite the fact that they intend to obtain a mortgage for a shorter term, and with a lower interest rate.
2) Homeowners are no longer able to refinance the value of their home to 95%. The limit of the re-finance will be 90%
3) People buying non-owner occupied homes, will be required to put down 20% as a down payment. A down payment under 20% for a non-owner occupied home, will no longer be allowed.
What do you think of these recent changes? Will it help the Canadian mortgage industry, or hinder it?
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It seems like a wise move to me, Neil. Just look at the housing disaster we have going on over here as a result of the loose lending practices…
Hey Steph,
Yes, I agree with you.
It is also a good move in order to show foreign investors that Canada remains an attractive place to invest.
With capital being mobile, sensitive and scarce, an announcement like this one, will no doubt instill confidence in the minds of foreign investors.
Thanks for stopping by!