Recent changes for government-backed insured mortgages

Brought to you by the Canadian Real Estate Association (CREA)

In late June the Minister of Finance announced changes to the standards governing government-backed insured mortgages:

  • 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.

These changes came into effect on July 9, 2012.

CREA has continually stressed the need to avoid changing the minimum down payment. Today’s announcement confirms Canadians will continue to be able to purchase a home with five percent down.

In response to the announcement, CREA’s President Wayne Moen issued a statement calling it "a measured response to the government’s often stated concern about household debt levels and the housing market," and noting that"Recent statistics from The Canadian Real Estate Association indicate that the national housing market remains balanced."

Moen advised: "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 communities."