The new rules for mortgages, set by the Federal Government, take effect March 18, 2011. Mortgages will not be available for longer than a 30 year amortization, and you will not be able to re-finance more than 85% of the value of your home. In addition, Ottawa will withdraw government insurance backing on lines of credit secured by homes.
At a news conference in Ottawa, Mr. Flaherty said the measures will encourage Canadians to save more through home ownership. He said they will also reduce the exposure of Canadians to financial risks. “Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty.
Analysts agree that these changes reflect a measured approach so that personal debt loads are scaled back and can be sustained if rates increase over the next few years, and, so the real estate market remains largely unaffected.
With these new mortgage rules in place and modest economic growth occurring, the prime rate should be kept in check until at least the last half of this year! But there are some market impacts that need to be examined. As they may provide the perfect buying opportunity for many.
In the short term, there may be a rush before March 18 for borrowers that still want to amortize over 35 years, but in the long term, the small percentage of buyers who may have to wait longer to make their home purchase could reduce demand just enough to keep price increases at a minimum. This could give many buyers the opportunity to buy!
The forecast this year says there will be a moderate adjustment to overall house prices, and if rates remain at low levels, it may bring a new level of affordability to buyers, even at amortizations less than 30 years.
Your Independent Mortgage Broker, Goerge Gikas, understands the impact of the new changes, and can help you understand all the factors that need to be considered in your mortgage financing.
The value is in trusted knowledge and expertise. Call George today and discuss your dreams. It may become reality earlier than you think!
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