Real Estate Mortgage Lending Changes

Kevin Flaherty
Tuesday, February 16, 2010

The government this morning announced three changes to the manner in which mortgages will be underwritten in Canada. These changes are

1)      All borrowers/home buyers to be qualified on the 5 year fixed rate regardless of which product they are opting for
2)      Maximum loan to value on a refinance is reduced to 90% from 95%
3)      All “speculative” real estate properties (I assume they are referring to rental properties) now require a 20% down payment

In short, these changes should not impact the rea estate market very much. Banks are currently using the 3 year fixed rate (3.59%)  to qualify variable clients so moving that to the 5 year fixed (3.89%)  is not a big deal. Second the refinance revision is of no interest to Realtors or the resale real estate market. Third but certainly not least, 20% down payment now required for “speculative” properties. The truth is cmhc’s premiums on rental properties were extremely unattractive and more times than not an investor would voluntarily put 20% down anyways.

Kevin Flaherty
iPro Realty Ltd. Brokerage
Direct: 1-877-352-4378
Web: http://Flaherty.ca

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