Thursday, June 21, 2012
Finance Minister Flaherty reduces mortgage terms from 30 to 25 years
Finance Minister Jim Flaherty announced today that the rules for CMHC (Central Mortgage and Housing Corporation) to allow a maximum of a 25 year amortization period rather than the present 30 year period. Refinancing loans will also be limited to only 80 per cent of the value of a home rather than the present 85 per cent.
These moves are meant to slow debt growth of Canadian households which had reached a record 152 per cent of income by the last quarter of 2011. The governor of the Canadian Central Bank Mark Carney has been lecturing for some time on the fact that Canadians were taking advantage of record low interest rates to place themselves in debt to an alarming level. While this move may slow down the real estate market slightly most analysts think that it was a good move even people in the real estate business. For more see this article.