New mortgage rules for homebuyers to come into effect April 19, 2010
Many new homebuyers require CMHC-insured mortgages. If you can't afford to put down a 20% downpayment on a property, lenders require that a homebuyer purchase insurance through the Canada Mortgage and Housing Corporation.
This insurance protects the lender's interest if a homebuyer defaults under the loan, and the market value of the property isn't high enough to satisfy the outstanding loan.
New changes being instituted by CMHC mean that a homebuyer may only be able to qualify for a smaller CMHC mortgage. Ultimately, this means that, for certain individuals at least, they will have to set their sights on purchasing less expensive homes.
The most significant change is the introduction of a new credit test that homebuyers will have to qualify under.
Using the current test, a homebuyer qualifies for a loan provided they can afford to make the payments under that loan assuming it was a 3 year, fixed-rate mortgage.
The new test is whether the homebuyer can afford the monthly payments under a 5 year fixed-rate mortgage. It doesn't matter whether a buyer is, in fact, choosing a variable rate mortgage. They still need to be able to afford what the payments would be under a fixed rate mortgage. The underlying idea here is that as interest rates increase over the next several years, as they are expected to, homebuyers will be able to afford to stay in their homes.
It's hard to say whether these changes will affect whether real estate prices continue to go up or not. 
CMHC will institute these new rules for homebuyers on April 19th.
This blog is intended as general information only and does not constitute legal advice. If you need legal advice, please speak to a lawyer.
Kerry Fox is a real estate lawyer helping homebuyers in Barrhaven, Nepean, Ontario.
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