No more 30 year mortgages.

..well that headline is a little misleading, you’ll still be able to get a 30 year mortgage but you better have a big down payment. No more 30 year mortgages for CMHC insured mortgages.

The country’s biggest banks were caught off guard on Wednesday night as the Department of Finance prepared to clamp down on mortgages by reducing the maximum amortization for a government-insured mortgage to 25 years from 30.

Ottawa will also limit the amount of equity that can be borrowed against a home to 80 per cent of the property’s value, down from 85 per cent.

The moves are designed to cool the housing market and limit the record levels of personal debt Canadians have amassed in recent years. Figures from Statistics Canada show the average ratio of debt-to-disposable income climbed to 152 per cent, up from 150.6 per cent at the end of 2011. A rise in interest rates or further job losses could put some households at financial risk, endangering any economic recovery.

So we’ve come circle with mortgages going from 25 year, cranked all the way up to US bubble style zero-down 40 year mortgages and then ramped back down over the last few years to a maximum 25 year amort. It will be very interesting to see what this does to some of Canadas overpriced markets.

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Hibernating Renter
Hibernating Renter
8 years ago

@VMD: “neat idea! the problem is that makes those who show up easy targets to be rounded up by the RE cartel…”

Just wait long enough that the ex-bears are the only buyers left, then they’ll be our best friends.

VMD
VMD
8 years ago

@900kCrackHouse: neat idea! the problem is that makes those who show up easy targets to be rounded up by the RE cartel…

jesse
8 years ago
Makaya
Makaya
8 years ago

It didn’t take long for the propaganda machine to get back on its feet…

For many, new mortgage rules put home ownership out of reach

As I said earlier: cry me a river!

jesse
8 years ago

@VHB: “That has been the case for a few years now.”

for insured mortgages yes, for uninsured there is variance between banks on what… liberties… they take with mortgage qualifications.

jesse
8 years ago

@Anonymous: Yes the FAQ on the Dept of Finance website confirms existing mortgages will not have to reamortize. But if you refinance or kick out the amortization schedule you will be under the new rules.

Also they mentioned that you must have a hard mortgage contract in place by July 9th or you get the new rules. Remember this is only for insured mortgages; lenders can do whatever they want, but may change to 25y as the standard going forward.

VHB
VHB
8 years ago

@Anonymous: Why is Garth claiming it is new? Well, for starters, check your source. Garth is many things, but authoritatively accurate is not always one of them.

Makaya
Makaya
8 years ago

@900kCrackHouse: I’m in as long as the 20k party happens before I leave for Winnipeg in early September 🙂

Anonymous
Anonymous
8 years ago

@Anonymous:

Yes the source of the story 2 years ago claims: “the chartered bank 5-year posted rate” is used not the BOC rate which is much higher. According to Garth today the BOC rate is 5.44% which is much higher than any bank. Most banks have very low posted rates (now) probably for this reason.

Mclovin
Mclovin
8 years ago

190 was me.

I would love to come to a real 20k party!

Anonymous
Anonymous
8 years ago

@VHB: “That has been the case for a few years now.”

So why is Garth claiming this is new?

Anonymous
Anonymous
8 years ago

VMD 12% in one day. That’s a great gain! Good for you. Leveraged ETF’s are very dangerous things for anything other than the very very short term due to massive tracking errors. If I were you I would consider taking my profits. 🙂 JMHO

900kCrackHouse
900kCrackHouse
8 years ago

Ladies and gentlemen.

As it seems we are passed the peak, and are on the way down, our next milestone may be the perfect opportunity to have a real life inventory party. Haven’t you always wanted to meet VMD, BestPlaceonMeth, Gordolio, PaulB, Anonomouse, Mayaka, McLovin etc.

I suggest we start planning the 20k inventory party & 25 year amortization party. It could come soon or it could be a few months.

Of course we will invite “I buy 3 my husband buy 3”, and “25 year old male nurse” as well.

Interested in joining the official organizing committee? Email 20kparty@gmail.com.

Anonymous
Anonymous
8 years ago

What happens when you go to renew your 40 year mortgage? Do you still get 35 years to pay off the balance, or do you have to jump ten years in a single bound. Keep in mind that after the first five years of a 40 year amortization you have paid off almost nothing,

Anonymous
Anonymous
8 years ago
VHB
VHB
8 years ago

@Anonymous: “We heard you must qualify for the 5 year rate but according the Garth it is the BOC benchmark 5 year which currently sits at 5.44% you have to qualify for.”

That has been the case for a few years now.

Anonymous
Anonymous
8 years ago

Something from Garth’s blog today not discussed here which is significant if true (See note below). We heard you must qualify for the 5 year rate but according the Garth it is the BOC benchmark 5 year which currently sits at 5.44% you have to qualify for. That is a big difference from the 3.1% often posted. If it is 5.44% this market will crash fast. The difference on a 100K is $478 vs $606 you have to qualify for.

From Garth’s blog:

“And tougher hurdles for first-time borrowers looking for a cheap VRM, who now have to qualify for the Bank of Canada benchmark 5-year rate (currently 5.44%).”

Moe Szyslak
Moe Szyslak
8 years ago

@Anonymous: “@Anonymous: “Yes the new rules apply to condos. What they don’t apply to is buying a full building of 5 strata units or more.” Thanks. Duh, makes perfect sense. Feeling kind of stupid now, justifiably. I wasn’t thinking clearly with this lightheaded bear-tastic haze I’ve had all day. So another thing that was in the FAQ. On the surface the new rules seemingly apply to new mortgages only. However, if a pre-existing borrower tries to increase the mortgage principal on renewal or when moving, they will be subject to the new rules. “Q. I already have an insured mortgage. How will these changes affect me? A. Mortgage insurance is good for the life of the mortgage. Borrowers renewing their insured mortgages will not be affected by these changes. For example, if a borrower had a 30-year amortization and there… Read more »

Maverick
Maverick
8 years ago

Should be plenty of sales to end the month.

And also plenty of price changes thereafter 😀

VMD
VMD
8 years ago

@McLovin:
and my bit of 3x bear energy etf (ery) just went up 12.4% today (gonna hold on to it a bit longer..)
the stock market roller coaster ride nowadays is not for the faint of heart…

Arthur Fonzarelli
Arthur Fonzarelli
8 years ago

I got nothing to say except this: the Fonz is happy. Very happy. O glorious day!

Anonymous
Anonymous
8 years ago

@Anonymous: The 5 plus strata unit building would have to be worth less than 1 Million as well. Pretty much eliminates any building of that size.

Anonymous
Anonymous
8 years ago

@Moe Szyslak: “Q. Do these measures apply to multi-unit buildings?

A. These standards apply to mortgages on residential property with four units or less. ”
___________________________________________________________

Yes the new rules apply to condos. What they don’t apply to is buying a full building of 5 strata units or more. I am not sure you can even get CMHC insurance in such a case but anyway it will not impact anything we are concerned about here.

Tacky Tocker
Tacky Tocker
8 years ago

20 K party Friday June 29!

Moe Szyslak
Moe Szyslak
8 years ago

@Moe Szyslak@Moe Szyslak:

“Q. Do these measures apply to multi-unit buildings?

A. These standards apply to mortgages on residential property with four units or less. ”

This can’t possibly be right, can it? 30 year amorts would still apply to condos? I really hope I’m misinterpreting this. Someone please tell me I’m missing something.