Home Buying to Get Tougher

New federal measures will make it more difficult for homebuyer’s to get government backed mortgages. The measures are set to take place on April 19, 2010.

Homebuyer’s will now have to settle for a less expensive home or have a higher mortgage, The Toronto Star reported on Tuesday February 16, 2010.

The new rules will:

> Require all homebuyers to meet the higher borrowing qualification for a five-year fixed rate mortgage, even if seeking a mortgage with a lower interest rate and shorter term. Therefore thousands of buyers will have to provide a higher down payment or buy a less costly home.

> Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 percent of the value of their homes from 95 percent. Finance minister Jim Flaherty says this will discourage people from using their homes as “ATM machines”.

> Require a minimum down payment of 20 percent for government-backed mortgage insurance on non-owner-occupied properties “purchased for speculation”. This measure is meant to hold down speculative investments in non-owner-occupied residential properties involving one to four living units.

Flaherty says the government wants to slow down the fast-rising house prices and prevent homebuyers from getting into mortgages that they cannot afford once low interest rates move up from their current levels once the recession ends.