Your Personalized Real Estate Professional
Ottawa is thinking of tightening up mortgage standards in order to prevent people from piling debt. Finance Minister Jim Flaherty told CTV that he was worried people are getting into too much debt as rates are low and will be in trouble as interest rates rise, which they will do. This is resulting in the Conservative government considering making the down payment, which is currently at a minimum of 5%, into a higher figure and debating changing the maximum amortization period from 35 years to something less.
Mark Carney, the Bank of Canada Governor, stated that people need to be aware that rates will rise, but they just need to get their housing financials in order before this happens. He advotates more lending caution, but believes that Ottawa needs to be aware that putting more down or capping the maximum pay off period would be devastating for our economy since the real estate market is one of the few markets that has continued to tick during these economic times. If they're planning on doing this, it needs to be done in a gradual way as to not devastate the real estate market.
Is Ottawa going to go through with this idea? It is not known for sure. I have heard that these idea's may be put into place as early as Summer 2010. For those who almost have the 5% saved for a downpayment, I would suggest trying to get that last little bit before they increase the minimum downpayment and set back your dreams of home ownership by another year or two. I will definitely be updating the blog with more about this as new information comes out!
Information courtesy of CBC.ca