After March 18th, 2011 the maximum ammortization period on insured mortgages will be reduced from 35 years, to 30 years as a direct result of a policy change by the Canadian Federal Government.
This wil only apply to those refinancing or purchasing new homes. These changes will mostly affect the amount of money one will be able to loan to purchase anew home as well as how much they can borrow to repay other non mortgage debts against their home.
I will be interested to see what impact these changes will have on market volatility and price direction over the coming years. Do I think these changes will have a great impact on real estate prices? No, not really. Especially in the really hot market areas such as Downtown and West Vancouver. Here's why...
There will be a large impact on the price of homes certain purchasers will be able to buy, based on their GDS. Though recent studies show only a small number of home buyers are even borrowing anywhere near the maximum they could have qualified for, even under the old regulations. Also, recent studies show that half of all borrowers are excellerating their payments (increasing their monthly payments) and paying down the principle early. Therefore, the affect on the market overall will be relatively minor.
The greatest impact will be on those in "the margin" (buyers who want to borrow the maximum allowable) as they may not qualify for the amount they require to either purchase a higher priced property, or to even get into the market they deisre to be in. I also think these changes will hurt the young professionals the most.
Again, even though I think these changes are NOT in the genearl public's best interest, I don't believe it will have a great impact in the long run. The "Hot Markets" will continue to thrive, since very few of these properties are selling for prices that even feasable for economically challenged purchasers. In fact, I believe there very well may be Upward pressure on RE prices in areas surrounding the GVRD, such as Burnaby, Surrey, Langley, White Rock etc, since these will become more affordable in relation to what buyers can borrow.
I am of the opinion that this again another ploy by our government to look good in the eyes of voters. Necessary changes... NO. Just politics mixed into our housing market!