Buyers Beware
Today, Canada’s housing market took a strange turn that isn’t sitting quite right with some, and appeases others. The changes that took place were that the CMHC (Canadian Mortgage and Housing Corporation), who oversee and insure the vast majority of Canadian mortgages, has lowered the maximum amortization period from 30 years, to 25 years.
Now, this is being done to “ensure Canadians aren’t taking on more debt than they can afford“; however little to the CMHC’s concerns, this change will be seriously detrimental to new home buyers, and especially young ones. This decreased cap on amortization periods will do nothing but increase mortgage payments for new buyers, and become a large market deterrent, especially when you consider that 40 per cent of new mortgages last year were amortized over 30 years. Despite the government’s attempt to bring things back to the way they were in 2006 (a 25 year maximum amortization was in place before the Conservative government took over in 2006 and extended these periods to 40 years, and have since been shrinking back) it doesn’t seem that this may be the right approach to stabilize Canada’s barely recovering housing market. The Canadian real estate is only very recently beginning to recover, but this doesn’t mean that it’s stable, or recovered, so introducing more buying deterrents seems to be an unwise move…
What are your thoughts on this situation? Is this a good or bad decision to be made? Will the housing market continue to recover despite this deterring situation? Join the conversation with us on Twitter.
photo courtesy of twicepix
