For the fourth time in as many years, the Federal Government has announced action to restrict mortgage credit. The new measures include:
- The maximum amortization on a prime mortgage will be reduced from 30 to 25 years.
- Mortgage insurance will not be provided for properties valued over $1 million.
- Refinancing has been lowered from a maximum of 85% loan-to-value to a maximum of 80% loan-to-value.
The maximum gross debt service (GDS) and total debt service (TDS) will be limited to a maximum of 39% and 44% respectively. Currently, GDS does not apply to qualified borrowers with credit scores over 680.
These measures will take effect July 9, 2012.
For more information, here’s the government’s Q and A document: www.fin.gc.ca/n12/data/12-070_2-eng.asp