Mortgage Changes 2010 or Got 10% Down Payment?
In 2010 a set of mortgage changes were brought in to slow down the real estate market. They slowed things down a little, but then it all started to heat up and in 2021 the Real Estate world is out of control. In Ottawa people are buying before selling and every house is a bidding war. This article was written in 2010.
In 2010 a whole new set of rules came into play if you were trying to get a Mortgage for your home. Specifically those rules are:
Will this cause the Canadian housing bubble to pop? Don’t know, maybe it will cause a plethora of more interesting financing trickery on the side of the lenders? Still unclear about the meet standards for five-year fixed rule is going to be enforced, but we shall see, is all I can guess there.
The Government will therefore adjust the rules for government-backed insured mortgages as follows:
- Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
- Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
- Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
The 20% down on a non-owned property may cause a lot of interesting financial trickery (borrowing against your live in home, to get to 20% for your equity property?), but again, this should be interesting to see how it goes.
Is this the needle to pop the bubble? Maybe, but only time will tell.
Mortgage Penalty Fixes too?
The 2010 budget also mentions the following:
Standardizing the calculation and disclosure of mortgage pre-payment penalties. It is important that consumers have the information they need when making financial decisions, including when to pre-pay a mortgage. As such, the Government will bring forward regulations to bring greater clarity to the calculation of mortgage pre-payment penalties.
Wonder what that means? Any ideas?