Tighter mortgage regulations designed to pare back the current levels of household debt across Canada take effect today, meaning those looking for Canadian mortgages likely won’t have the option of a 35-year amortization.
The Canada Mortgage and Housing Corporation will no longer provide mortgage insurance for loans with a 35-year term, which could affect many first-time buyers. It also comes just a few years after the government cut off 40-year amortizations.
The changes also affect refinancing. Borrowers can now only borrow 85 percent of their home’s value through refinancing, instead of the previous limit of 90 percent.
Also, in one month’s time, the government will stop guaranteeing all home equity lines of credit, which could affect the home remodeling industry.
Many economists had thought the changes would lead to a sharp increase in home sales over the past few months, as buyers worked to beat today’s deadline. Increases were seen in some parts of the country, while they were subdued in others. For example, home sales in Edmonton last month were 20 percent below levels from last year.