AREAhub Special Alert
Change in CMHC mortgage rules July
AREA wants to ensure our members are
fully informed about changes in the industry that could affect your practice.
Today (June 21, 2012), the federal government announced amendments to government-backed mortgage standards
in Canada that will take effect on July 9, 2012.
Jim Flaherty, Minister of Finance, announced the following changes to the standards governing
- the maximum amortization period
was reduced from 30 years to 25 years;
- the maximum amount Canadians
can withdraw in refinancing their mortgages was lowered to 80 per cent from
85 per cent of the value of their homes;
- the maximum gross debt service
ratio was fixed at 39 per cent and the maximum total debt service ratio
at 44 per cent; and
- the availability of
government-backed insured mortgages was limited to homes with a purchase price of less
than $1 million.
Today’s announcement confirms
Canadians will continue to be able to purchase a home with five percent down.
Details of the announcement can be found here.
In response to the announcement,
AREA member and CREA President Wayne Moen issued the following statement:
"We believe today’s announcement
is a measured response to the government’s often stated concern about household
debt levels and the housing market. That being said, we would remind the government that the re-sale housing
a significant contribution to the economy, adding an estimated $20 billion in spin-off spending and over 165,000
jobs in 2012.
Recent statistics from The
Canadian Real Estate Association indicate that the national housing market remains balanced.
The impact of measures like those announced today must be closely monitored to ensure they have the
impact and don’t create a spillover effect and slow the economy.
For these reasons, going forward,
we would urge the government to consider the impact of further interventions in the
REALTORS® and the
government share a common interest in the value of homeownership and its contribution to the
economy and the well-being of Canadians and our communities.
Property buyers and sellers
should contact a REALTOR® if they are considering entering the housing or commercial
real estate markets to better understand the impact of these changes in their