The much anticipated announcement of the new guidelines for Canadian mortgage lending occurred on June 21st, sparking a media frenzy. Jim Flaherty announced the government is setting forth four major changes, which will come into effect on July 9th, 2012. These changes include:
- Reducing the maximum amortization period on mortgages with default insurance from 30 years to 25.
- Lowering the maximum amount Canadians can borrow when refinancing from 85% to 80% of the value of the home.
- Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%.
- Limiting the availability of government-backed insured mortgages to homes with purchase prices under $1 million.
Those with further questions or concerns should feel free to consult a professional Mortgage Broker in Canada.