This is great stuff .... in case you missed Jim Flaherty's (Finance Minister of Canada) announcement yesterday here's a quick summary courtesy of the Financial Post:
(Source)
Some quick observations:
1. These announcements typically only apply to CMHC insured mortgages. So if you're using non-CMHC mortgage programs these may not apply. Ask your mortgage broker for details around this - not your bank - they typically deal only with CMHC.
2. The reason the government is doing this is because they can't raise interest rates. The U.S. rates are so low that if we raised ours it would crush the Canadian economy.
3. Also, if you put down 20% or more on properties you'll likely still have access to longer amortization periods. In fact, although most Canadians believe 35 and 40 year amortizations were gone long ago several mortgage brokers still had access to them.
4. For buyers, this announcement means more demand for properties before the July 9th effective date.
5. For investors who already own property, you're likely going to have more demand from possible tenants. Those people who were just able to qualify for a mortgage will now likely not qualify and may need to rent.
6. Because this makes affordability in Toronto even more difficult expect demand for starter homes further away from the downtown Toronto core to increase.
Who is saving government's from themselves?
Back to the headline of the National Post article...
If the finance minister is saving us from ourselves then we've gotta ask?
Who is saving the government from themselves?
Why can Canadians not be trusted to manage their debt but governments spend money they don't have in increasing quantities.
Debt levels are at record highs across the globe.
Perhaps what is good for the average Canadian is good for the government too? 🙂
We may never get an answer to that one.
Until next time ... Your Life! Your Terms!
Thanks for adding some much needed level headed prespective. Clearly the fear mongers have Flaherty be the short and curlies.
Some numbers that make the idea of Canadians being in trouble somewhat ludicrous include...National mortgage default rate is 0.4%....Credit card default rate at a whoopping 1.06%...btw credit card debt only makes up 5% of Canadians debt...and finally Canadians have 152% debt compared to their income...OMG...the sky is falling....oh wait, that means if I make $100,000 a year and I have a mortgage for $152,000, I'm one of those people in danger that needs to be saved from myself...lol...not to mention that most "what can you afford" mortgage calculators will suggest that someone with a $100,000 annual income can get a $500,000 home...with 20% down that's a $400,000 mortgage...go figure