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New lending rules drop CMHC mortgages by 40%

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guest | 30 Aug 2011, 02:10 PM Agree 0

Earlier this year the government limited insured mortgage refinances to a maximum of 85% mortgage-to-value ratio, after previously setting the mark at 90%. Finance Minister Jim Flaherty also reduced the maximum amortization period for new government-backed insured mortgages to 30 years from 35. While buying activity did not seem to slow much after these changes, refinancing seems to have been particularly hit.Additionally, homeowner mortgage insurance dropped 10% initially after implementation of the news rules, but by June was down a lesser 5%.The CMHC also noted in its report that insured mortgage volumes were down 13% compared to last year and 20% below what was anticipated for the year. Along with the new mortgage rules, the CMHC attributed weaker housing activity and a drop in its mortgage insurance share to the drop in activity.Flaherty in June told reporters he was “satisfied” with the moderation in the housing market following the tightened rules.
  • Chris | 30 Aug 2011, 04:23 PM Agree 0
    I don't understand how the CMHC insured mortgages dropped by 40%.

    Almost all banks only give an 80% mortgage-to-value ratio. So the bank of Canada dropping it from 90% to 85% changed absolutely nothing in the day to day business the banks do.
  • Chris | 30 Aug 2011, 05:23 PM Agree 0
    I don't understand how the CMHC insured mortgages dropped by 40%.

    Almost all banks only give an 80% mortgage-to-value ratio. So the bank of Canada dropping it from 90% to 85% changed absolutely nothing in the day to day business the banks do.
  • slaman | 30 Aug 2011, 07:53 PM Agree 0
    You are able to borrow more than 80% mortgage-to-value as long as you take an additional CMHC insurance - which adds a premium on top of your principal...

    I'm pretty sure that at one point you could get 95% mortgage-to-value with about 3.9% CMHC insurance.
  • slaman | 30 Aug 2011, 08:53 PM Agree 0
    You are able to borrow more than 80% mortgage-to-value as long as you take an additional CMHC insurance - which adds a premium on top of your principal...

    I'm pretty sure that at one point you could get 95% mortgage-to-value with about 3.9% CMHC insurance.
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