The New 2011 Department of Finance Mortgage Rule Changes and Real Estate in Vancouver
Canada’s Department of Finance, which oversees and regulates Canada’s mortgage market which has a huge impact on Real Estate in Vancouver has enacted a new series of measures to cool the property market across Canada. The changes announced on January 17, 2011 are designed to allow the government to cool the Real Estate Market without affecting the overall economy by raising the Bank of Canada’s Prime Rate.
Call in the Expert!
As I am Realtor and not a Mortgage Broker, so I called in the expert to answer my questions on the new rules. Jessi Johnson, a Vancouver Mortgage Broker was kind enough to meet with me and explain the changes in detail.
Since there was sooo much detail, we broke up the discussion on the New 2011 Department of Finance Mortgage Rules and its effects on Vancouver Real Estate into a three part series. In part one of the series we are going to talk about the changes to maximum amortization.
Shortened Amortization for High Ratio Mortgages?
Yes! For mortgages were a Buyer is putting less than 20% down (ie High Ratio Mortgage, high mortgage value compared to property value), the new rules shorten the maximum amortization from 35 years to 30 years. But keep in mind! This is only for high ratio mortgages that are insured by CMHC! Please note!
If you are putting more than 20% down you can still get a 35 or 40 year amortization!
How can this effect Real Estate in Vancouver?
Shortened amortizations may effect Vancouver’s real estate market by making it more difficult for first time home buyers and others with a low downpayment relying on the lower payments that come with the longer amortizations to get their first mortgage. The shortened amortizations effectively reduce the amount that Buyers can borrow because they have to pay more money back faster with the shortened amortization. This will make the Vancouver real estate market more stable, but it could make real estate less affordable in Vancouver.
This could cause a reduction in demand in the real estate market in Vancouver that. Will this cause prices to go down? I’d love to hear your thoughts!
Check out Episode 2 of 3 of the 2011 Canadian Mortgage Rule Changes Refinancing!
First Time Home Buyer? *** You NEED to check out these VIDEOS with Lots of Advice for First Time Home Buyers! ***
I’d love to hear your thoughts on this in the form of a comment down below!