New mortgage rule changs for 2011

Jim Flaherty , the finance minister, made 3 changes to the mortgage rules today.
1- mortgage amortizations were shortened from 35 years to 30 years
2- home refinancing was lowered from 90% to 85%
3- Home equity lines of credit()HELOCS) will not be insured by the government
How will this affect home owners and potential home owners? With 5 years shaved off their mortgages, monthly payments will rise. Consumers will get less house for their money as the monthly payments will put homes previously within their budget in the unaffordable category. How will this affect home owners and potential home owners? With 5 years shaved off their mortgages, monthly payments will rise. Consumers will get less house for their money as the monthly payments will put homes previously within their budget in the unaffordable category.
Of more importance is the 2nd rule change. If you want to refinance and take money out for your TFSA, RRSP, investments or for renos, you will be restricted to leaving 15% equity behind in your home. What most people will do is move to higher interest rate loans such as unsecured lines of credit, consumer loans and credit cards. I believe that this will encourage inflation and result in higher interest rates.
Finally, insuring HELOCS isn't an issue. Most HELOCS have 80% LTV limits so they were not insured anyways.
Today's new rules will be applied March 18th. If you are looking for a mortgage with a 35 year amortization to keep the payments down or if you want to refinance your home, you have until March 17th to take advantage of our present rules.
Call me at 403-836-1201 if you have any questions.