On Wednesday night the Bank of Canada made an un-expected announcement about some major changes to mortgage policy in Canada. The changes are viewed by CIBC economist Benjamin Tal as a "gentle push" to cool down the housing market.
What are the changes?
The 2 major changes announced are (1) a reduction in the maximum allowed amortization from 30 to 25 years on government backed mortgages and (2) a limit on the amount of equity that can be borrowed against a home from 85 to 80%.
Since the economy shows very little signs of a strong recovery The Bank of Canada is expected to keep interest rates low for quite some time. Tightening mortgage rules is one way for Ottawa to ensure that Canadian's don't take on too much debt during the pro-longed period of low interest rates.
More changes are expec ted to be announced today.
How will you be effected?
The changes announced so far will mean a higher monthly payment for home buyers but will also mean that your loan will be paid off faster.
It is more imprtant than ever, with these policy changes, to be sure that you are finacially ready to become a home buyer. Before you start looking we recommend that you sit down and take a detailed look at your finances and what you can afford and if you have questions speak with a mortgage professional. We strongly recommend getting pre-approved, it will take alot of the stress out of the home buying experience and will allow you to be totally realistic during the buying process.
Feel free to contact me any time to learn more about the Barrie real estate market or this important information, and be sure to forward this article on to any friends or fasmily that my be interested as well.
Sincerely,
Peggy Hill
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