Ottawa is changing mortgage rules to make it harder for people to buy a home.
The government is cutting the maximum amortization period for government insured homes to 25 years from the current 30 years.
Mortgage insurance is required for any homebuyer whose down payment is less than 20 per cent.
Banks will still be allowed to offer 30-year amortization periods on mortgages that include a down payment of 20 per cent or more.
In another change, to qualify for a mortgage you cannot spend more than 39 per cent of your household income on home expenses such as mortgage, property taxes and heating.
The changes mean about five per centof Canadians who are thinking about buying a new home will likely no longer qualify.
“It will mean that some people will not buy into the market, it will also mean that some people will buy less into the market, they’ll buy a less expensive home or less expensive condominium,” says Finance Minister Jim Flaherty. “I consider that desirable.”
The changes are part of Ottawa’s attempt to slow the amount of debt Canadian households are accumulating.
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