Government of Canada today announced a new sets of mortgage rules to be implemented on March 18, 2011 and April 18, 2011. Lately there had been talks in national news media about these forthcoming changes and this was officially announced today.
In summary the changes were:
- Maximum amortization period was reduced to to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent.
- The maximum amount Canadians can borrow in refinancing their mortgages is now 85 percent reduced from 90 percent of the value of their homes.
- No more government insurance backing on home equity lines of credit, or HELOCs.
The reaction initially has been positive from the banking industry, but we have to wait to understand the full impact of it.
The adjustments to the mortgage insurance will come into force on March 18, 2011.
The withdrawal of government insurance backing on lines of credit secured by homes will come into force on April 18, 2011.