Most Canadians are unfamiliar with today's new mortgage rules -

Most Canadians are unfamiliar with today’s new mortgage rules


Big changes in Canada’s mortgage market came into effect today, but the majority of Canadians are unaware of the new, stricter regulations. 

Desperate to cool down the country’s overheated mortgage market, finance minister Jim Flaherty announced a series of new rules to dissuade Canadians from getting into irrevocable debt on June 29th. CBC reports the updated regulations, which come into effect today, prohibit lenders from issuing home equity loans above 80 per cent of a property’s value (down from 85 per cent) and drops the maximum amortization period from 30 years to 25 years. 

According to the Globe and Mail, a survey by Bank of Montreal indicates that 49 per cent aren’t familiar with the new regulations, but that 14 per cent of potential home buyers says they are less likely to buy a new house in the next five years, while 41 per cent of those who still expect to purchase a property in that time period say it’s now more likely that they’ll spend less.

To those few Canadians who are aware of the new limits on the insured mortgage market, the new numbers may seem a  bit familiar. Flaherty has simply returned regulations to where they stood in 2006 before the Harper government extended the mortgage rules to allow more people to qualify.

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Most Canadians are unfamiliar with today’s new mortgage rules

  1. What about bad, bad reverse mortgages seniors get suckered into?
    (Reuters) – Consumer advocates, government regulators and watchdogs have been warning seniors for several years about the risks associated with reverse mortgages. Now, the red flags are being hoisted significantly higher.
    The new federal Consumer Financial Protection Bureau (CFPB) has issued a report signaling a likely tightening of regulations for reverse loans. Regulation of all mortgages was transferred to the CFPB under the Dodd-Frank reform law. Congress also instructed the agency to produce a detailed study on the reverse loan market – and to issue new regulations if its research uncovered unfair, deceptive or abusive practices.
    The CFPB’s report confirms earlier warnings that reverse mortgages have become an increasingly risky business for borrowers and would-be borrowers. A growing number of borrowers are taking on reverse mortgage loans at younger ages in return for large lump payouts that carry high fixed rates of interest. And a growing percentage of outstanding loans are at risk of default.
    Rudy Haugeneder
    Victoria, BC

  2. This is a surprise? Most Canadians are unaware that iving off their home equity was a bad idea.