New mortgage rules start Friday

The new rules on Friday will drop the maximum mortgage payback period 30 years from the previous 35. That change will in essence trim off 6% to7% off the purchasing power of a borrower – roughly $20,000 from the amount someone who qualifies for a $300,000 mortgage can borrow.

Although it will also slightly raise the monthly payment on such a mortgage by $105 per month, it would also mean total interest would be $41,850 less due to the fact it would be paid back five years sooner.

The pending higher monthly payments has been attributed to some small increased buying activity in markets like Vancouver, but has not made major waves in the overall Canadian market in prices or total sales. Home sales were down in some major markets in February compared to a year earlier, such as Toronto and Edmonton.

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