New mortgage rules go into effect, part of Liberal plan to limit risks
Posted Feb 15, 2016 6:41 am.
Last Updated Feb 15, 2016 4:54 pm.
This article is more than 5 years old.
New federal rules for Canadian mortgages have now gone into effect.
The changes affect properties that cost more than $500,000 — a small percentage of the overall market.
Mortgage Broker Judy Conrad with Dominion Lending Centres – Westcor, says down payment rates will increase from 5 to 10 per cent.
“The key is the actual purchase price of the home. So, the government has decided now, for homes that are above $500,000, they’re going to be charging a portion of it. It’s going to increase from 5 to 10 per cent, but only for the portion of the house price that exceeds $500,000,” Conrad said.
Finance Minister Bill Morneau has said the new measure — effective Monday — aims to ensure buyers have sufficient equity in their homes.
Lenders also face new capital requirements to keep pace with the growing risk of the real estate markets that they bankroll.
And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.
The Finance Department has tightened mortgage rules on several occasions in recent years — along with requiring stricter enforcement and management of loans — to weed out marginal buyers and speculators.
