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EnMasse
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Tehanu
More or less, more or less
Joined: 12 Apr 2006
Posts: 17641
Location: Seceded from the Ford Nation
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 Posted: Fri Jul 11, 2008 3:11 pm Post subject: Mortgage reform |
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No more 40-year mortgages, announced Ottawa, partly wanting to stave off any possibility of a similar crash to the subprime market in the USA (which I gather had quite different roots). But mostly, it seems, to protect against too many mortgage insurance claims. Similarly, they are instituting 5% unfinanced downpayments -- although you can borrow the 5%, it won't be insured -- and a higher credit score.
| Quote: | The 40-year mortgage, launched just over two years ago, will probably expire in October.
... Soon, all of Canada's mortgage insurers will have to underwrite mortgages paid back over 35 years at most. Ottawa is not killing the long-payback loan because it sees a U.S.-style housing bust coming to Canada.
... A more urgent reason is to protect taxpayers – you and me – from possible losses if too many stretched borrowers default on their 40-year mortgages.
... The average Canadian will pay only $55 a month more by taking out a 35-year mortgage instead of a 40-year loan, estimates Pascal Gauthier, an economist with TD Bank Financial Group.
... But other rules unveiled Wednesday could make it harder for first-time buyers to qualify for government-insured mortgages.
Borrowers will have to make a 5 per cent down payment instead of financing the entire house price.
... Borrowers will also need a minimum credit score of 620 to qualify for a government-insured mortgage. |
Toronto Star. |
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Cartman
Beyond cuddly
Joined: 11 Apr 2006
Posts: 8635
Location: OMG! They killed Jason Kenney!
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| Posted: Fri Jul 11, 2008 3:40 pm Post subject: |
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| Canadian banks sure have it made. If a person defaults on their payments, the bank gets the house, the down payment, any interest on the loan payments and the mortgage is insured. Under these low-risk conditions, I also doubt any US style crash is coming our way. |
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