February 19, 2010

OTTAWA – With the Canadian housing market just beginning to rebound in earnest, federal finance minister, Jim Flaherty, has taken action which he says is designed to stamp out any chance of a housing bubble forming in Canada. New reforms announced by the Conservative government will require that, as of April 19, all new borrowers will have to meet standards for five-year, fixed-rate mortgages even if they're seeking a shorter, variable-rate loan. Also, the government is lowering the maximum amount Canadians can withdraw when refinancing to 90 per cent of the value of their homes, from the current 95 per cent, and requiring a 20 per-cent down payment for government-backed mortgage insurance on "speculative" investment properties.
"There are no definitive signs of a housing bubble," Mr. Flaherty told reporters in Ottawa. "We're being pro-active […] to help prevent negative trends from developing."
Measures which were reportedly considered but rejected included an increase to the minimum down payment on homes from five per cent, and shortening the maximum time over which borrowers can spread out their payments from the current 35 years.