About half Canadians don’t know the mortgage rules change today

Just read the news this morning regarding to the new mortgage rules in Canada. Yes I am part of the half Canadians that don't know about it. Apparently, federal government announce the new rules on Jun 21, 2012, and it will take effect on July 9, 2012

Picture from http://fortmcmurraymortgage.com

Here're the changes: 


- Reduce the maximum amortization period to 25 years from 30 years. This will reduce the total interest payments Canadian families make on their mortgage, helping them build up equity in their homes more quickly and pay off their mortgage sooner. 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% from 85% of the valve 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% and the maximum total debt service ration at 44%. 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 home with a purchase price of less than $1 million

The rule sound making Canadian buying house more difficult, but I think it's a good thing. Investing a house is great for saving and some good potential financial return, but if investing a house that cannot afford it may give you lots of pain.

Source: financial post