An interesting read on changes to the mortgage market over the years as documented by the Canadian Bankers Association came across my desk today thanks to Laurie Anne Faulkner of Invis Mortgages. Since 2008, several changes to rules for government-backed mortgages have reduced amortization periods (from 40 years to 25 years), increased minimum down payment requirements (at least 5% is now required whereas before none was needed) and limitations on max gross debt service has dropped (to 39% from 44%). These changes may reduce the number of people qualifying for insured mortgages in Canada and force borrowers to either postpone their purchase or buy a less expensive home. Historically, Canadians are prudent borrowers as less and half of 1% of all mortgages are in arrears for the last 2 decades. Banks are prudent lenders as well which resulted in Canada avoiding the problems seen in the US housing market. Some food for thought to start the new year!
Posted on: Wed, 07 Jan 2015 20:29:26 +0000
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