Six years later and we’re back where we started, albeit now even more heavily indebted and with housing prices having skyrocketed (or still skyrocketing) in cities across Canada.
The Department of Finance confirmed this evening that for the 4th time in 4 years they’re backpedaling on the mortgage rules, reducing the maximum amortization for an insured mortgage to 25 years from the current 30. Refinancing loans will also be reduced to 80% of the value of a home from the current 85%.
CAAMP’s response is predictable: “The data we have has shown that Canadians are acting responsibly,” their CEO argued, adding that Mr. Flaherty said just three months ago that no new rules were coming. Was CAAMP vocally opposed to the reckless extension of amortizations from 25 to 40 years back in 2006? So no real surprise that their self-serving warnings earlier this year went unheeded on Parliament Hill.
When will these rules be implemented? What effect will this have on the housing market? Apparently, even the big banks were “caught off guard” with this announcement so I’ll have their responses posted in the comment section below as they are released.