Barry Berg

On Feb. 15, the federal government announced that mortgage rules are changing. Set to take effect Apr. 19, these new, stricter rules could, according to some market analysts, spur on a buying frenzy among prospective buyers who want to purchase before the effective date. Prospective homebuyers may also want to jump into the market before interest rate hikes and the introduction of the HST in Ontario and British Columbia.

What are the new rules?

• In order to qualify for an insured mortgage, borrowers will have to meet the standards for a five-year fixed-rate mortgage even if they choose a mortgage with a lower interest rate and shorter term.
• Canadians will be limited on the amount they can borrow on their homes—down to 90 percent from the current 95 percent.
• And to discourage speculation, real estate investors who buy for rental purposes will have to put 20 percent down instead of the current five percent.

“There’s no clear evidence of a housing bubble, but we’re taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it,” Finance Minister Jim Flaherty said in a press release.