Taking Proactive, Prudent and Cautious Steps…

If the subject sounds something like Brian Burke’s, “…pugnacity, testosterone, truculence and belligerence“, hockey quote, well it’s not quite.

The subject is the words of another Irishman, The Honourable Jim Flaherty, Minister of Finance, who on February 16th announced a number of measured steps aimed at supporting the long-term stability of Canada’s housing market and continue to encourage home ownership for Canadians.

Homebuyers looking to qualify for a government-backed insured mortgage after April 19, 2010 will need to meet three new requirements, including:

o   Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term;

o   Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes; and,

o   Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

Well it’s about time!

With interest rates having been at all time lows the past few years, many of the new buyers, who entered the market with little equity, are expected to be facing increased, and perhaps prohibitive, lending rates when renewing their financing.

This announcement is neither “proactive” nor an “early policy action“, as Flaherty claimed in his Government of Canada Takes Action to Strengthen Housing Financing release.

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