HARPER GOVERNMENT TAKES FURTHER ACTION TO STRENGTHEN CANADA’S
2012-06-21 | 09:30:43
Harper Government Takes Further Action to Strengthen Canada's Housi... http://www.fin.gc.ca/n12/12-070-eng.asp
Ottawa, June 21, 2012
Backgrounder: Supporting the Long-Term Stability of Canadaâ€™s Housing Market
Frequently Asked Questions
As part of the Governmentâ€™s continuous efforts to strengthen Canadaâ€™s housing finance system, the Honourable Jim
Flaherty, Minister of Finance, today announced further adjustments to the rules for government-backed insured
â€śOur Government stands behind the efforts of hard-working Canadian families to save by investing in their homes and
their future,â€ť said Minister Flaherty. â€śThe adjustments we are making today will help them realize their goals, build on
the previous measures we have introduced to keep the housing market strong, and help to ensure households do not
become overextended. As just one example, the reductions to the maximum amortization period since 2008 would
save a typical Canadian family with a $350,000 mortgage about $150,000 in borrowing costs over the life of that
The Government is announcing four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent: Reduce the maximum amortization period to 25 years from 30 years. This will reduce the total interest payments Canadian families make on their mortgages, helping them build up equity in their homes more quickly and pay off their mortgages sooner.
Â The maximum amortization period was set at 35 years in 2008 and further reduced to 30 years in 2011.
Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes. This will promote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes.
Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent. This will better protect Canadian households that may be vulnerable to economic shocks or an increase in interest rates.
Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.
â€śInvesting in a home is a great way to save,â€ť said Minister Flaherty. â€śThat is the dream that mortgage insurance was intended to support. The measures we are taking today maintain that intended purpose.â€ť
Minister Flaherty said the new rules will take effect on July 9, 2012.