If you want into the Canadian real estate market with the lowest possible entry-level lending terms and conditions available then I believe your time could be running out.
In October 2008 the federal government bailed out the Canadian banks with a $25-billion takeover of bank-held mortgages to ease a growing credit crunch, and Finance Minister, Flaherty told the CBC it would, “make loans and mortgages more available and more affordable for ordinary Canadians and businesses,” through CMHC. This was quietly expanded to $69-billion.
In April of 2010 the feds decided that mortgages were “too available” so CMHC were required to do some tweaking of their lending guidelines following Jim Flaherty’s announcement.
The week before Christmas the Governor of the Bank of Canada, Mark Carney, issued a debt warning, that according to the Globe and Mail, “looks a lot like a very public nudge to Mr. Flaherty and Stephen Harper”.
So that brings us to the latest involvement of the federal government, and the Calgary Herald states, Flaherty insists that the banks got themselves into this mess and it’s up to them to fix it.
So here we are fast approaching 2011 with Carney making frequent warnings about the high debt of Canadians, and that “the level of vulnerable households in Canada is high”.
There had been plenty of speculation leading up to April’s measures that Flaherty might raise the minimum down payment on a home to 10 per cent, which still sits at five per cent, and lower the 35 years maximum amortization period for mortgages to 30 years.
I’ll speculate that these measures are now highly likely to happen in (or before) the next federal budget in February. So if you want into the Canadian real estate market with the lowest possible entry-level lending terms and conditions available then I believe your time could well be running out.
In fact, you might even want to consider taking possession before the end of February in the event any budget changes are immediate; ouch!