The New Year started with some turmoil for Toronto real estate home buyers with word that the federal government was going to change their mortgage regulations.
Theoretically these new rules just apply to CMHC (Canada Mortgage and Housing), the entity that insures hi-ratio mortgages for buyers with less than 20% down payment.
It’s still unclear but historically the other high-ratio insurers also go along with the change in rules – for them it’s the ‘safer’ route but it does tend to restrict competition.
Otherwise, we were looking for a stable year in real estate for Toronto with moderate but not crazy activity like we had last spring. We’ll see if these rule changes influence the market – at least on the short term – as some buyers rush to purchase to take advantage of the old rules.
So the news for Toronto house and condo buyers and sellers right now is the Federal Government’s change to the mortgage amortization limits available to all borrowers.
For the past two years we’ve had 25-year, 30-year and 35-year amortizations available to every Toronto home buyer. As of March 18, the 35-year option will not be available any more.
The effect of this will be to reduce the amount of mortgage you could qualify for by between $22,000 to $37,000 if you have a 5% down payment and are purchasing a house or condo between $300-500,000. Look on our blog for the February 4th article which explains this in more detail.
The government’s rationale for this change was to prevent home buyers from getting in over their heads with mortgage debt and to slow the market down somewhat.
Watch the complete report below to get all the details.
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