Federal finance Minister Jim Flaherty announced new rules that will be coming into effect on April 19, 2010. The new rules are aimed at preventing homebuyers from getting into financial difficulty when mortgage rates rise.
Broadly speaking, the plan unveiled has three components.
First, Ottawa will require that all borrowers meet the standards for a five-year fixed-rate mortgage, even if they choose a variable mortgage with a lower rate or a shorter term.
"This will guard against higher rates in the future," Flaherty said.
Second, the rules would lower the maximum Canadians can withdraw when refinancing their mortgages to 90 per cent of the value of their home, from 95 per cent.
And finally, Ottawa will now require a minimum 20 per cent down payment to qualify for CMHC insurance for non-owner-occupied properties purchased as an investment.
The last rule is aimed at reining in would-be real estate speculators who own multiple properties beyond their primary residence.
"We want to discourage the tendency some people have to use a home as an ATM, or buy three or four condos on speculation," Flaherty said.
Find out more at: http://www.cbc.ca/canada/windsor/story/2010/02/16/mortgage-flaherty.html