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.