Canada curbs lending to check housing boom

February 17, 2010

Below is a  report by John Greenwood, Financial Post, published: Tuesday, February 16, 2010.

The new mortgage rules announced by the federal government may briefly throw a little cold water on the housing market but the big banks got what some say they wanted all along.

Under the new rules which take effect April 19, borrowers will be required to:

  1. Meet the standard of a five-year fixed rate mortgage even if they are choosing a shorter term, or viarable mortgage with a lower rate.
  2. The maximum amount they can withdraw in refinancing their mortgages will be lowered from 95% to 90%.
  3. Those looking to buy investment properties will be required to make a minimum 20% down payment.

 Read the full article here.

Will the red-hot real estate market in Canada, especially the major cities in Vancouver, Victoria and Toronto be dampened by the above move?

The move will help in cooling the housing market, and may bring about a more balanced market for 2010.

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