CMHC Changes Jan 17 2011

Posted by: Toronto Real Estate Admin / Category: News Bulletin, Today's Mortgage Rates, Toronto Real Estate

News Bulletin Jan 17, 2011

This morning the Finance Minister Jim Flaherty announced tighter mortgage lending conditions (CMHC Insured) , effective March 18, 2011, with the intent to protect borrrowers from “overborrowing” and improve their ability to manage their debt wisely in the event that interest rates rise.

The key points were as follows:


Amortization Rate
Reduce the maximum amortization period to 30 years from 35 years for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent. This will significantly reduce the total interest payments Canadian families make on their mortgages, allow Canadian families to build up equity in their homes more quickly, and help Canadians pay off their mortgages before they retire.


Lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. This will promote saving through home ownership and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.

Lines of Credit (effective April 18, 2011)

Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit, or HELOCs. This will ensure that risks associated with consumer debt products used to borrow funds unrelated to house purchases are managed by the financial institutions and not borne by taxpayers.


Note that lenders may put these changes into effect at their own discretion before March 18, 2011.

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