In the latest CREW poll 66% of readers answered “yes” to the question “Will the new 25-year cap for insured mortgages hurt you?”
The poll comes on the heels of a press conference by Finance Minister Jim Flaherty Thursday, announcing key changes to mortgage rules, including lowering the maximum amortization on a government-insured mortgage to 25 years from the current 30.
Investor Edward Renkema says the split in the poll is probably indicative of how many investors currently have Canadian Mortgage and Housing Corporation (CMHC) coverage on their investment properties.
“The payoff for using CMHC is lower rates and lower payments, especially for bigger multi-family units, so it will affect people who use it,” Renkema says. “But for smaller investors I’m not sure many use CMHC.”
The government will also cap refinances at 80 per cent of a home's value and set a $1-million ceiling for homes eligible for government-backed insurance. Also effective July 9, it will restrict all would-be borrowers from mortgage insurance if their maximum gross debt service ratio exceeds 39 per cent and their maximum total debt service ratio rests above 44 per cent.
Realtors yesterday were cautiously optimistic about the change.
“We believe today's announcement is a measured response to the government's often stated concern about household debt levels and the housing market,” Canadian Real Estate Association President Wayne Moen. “That being said, we would remind the government that the re-sale housing market makes a significant contribution to the economy, adding an estimated $20 billion in spin-off spending and over 165,000 jobs in 2012.”
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