Finance Minister Jim Flaherty Tuesday announced tighter lending standards for mortgages to take effect April 19, 2010.
Under the new rules, all borrowers will need to meet standards for five-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term.
Also, the government is lowering the maximum amount Canadians can withdraw when refinancing to 90 per cent of the value of their homes, from the current 95 per cent, and requiring a 20 per cent down payment for government-backed mortgage insurance on “speculative” investment properties.
It will also be requirement to have a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner occupied properties purchased for speculation.
A backgrounder circulated by Finance Department officials explained that the change won’t apply to borrowers who buy residential properties where they plan to live but which also include some rental units.
More about the mortgage regulations from The Globe.
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