No more 30 year amortizations in Canada

[Frugalityisthenewblack]

The government is tightening rules for mortage lenders in Canada. No more 30 year amortization...and a minimum of 20 % down. (For government insured mortgages).. .http://www.theglobeandmail.com/repo...no-more-30-year-amortizations/article4358876/

 

[Lakewood90712]

That is the way it should be , here in the US too.

 

[Frugalityisthenewblack]

I've always thought it funny--that we Canadians are seen as very liberal in many aspects....but our fiscal policies are more conservative than our neighbours to the south. It is curious.

 

[Nords]

That is the way it should be , here in the US too.

Sure, you go first. Good luck buying into the Hawaii market.

 

[Lakewood90712]

Hey Nords , can you lend me say 100k or so , off the books, so I can get the down payment for that Maui condo I plan to retire to next year ? I'm good for it.

 

[Nords]

Hey Nords , can you lend me say 100k or so , off the books, so I can get the down payment for that Maui condo I plan to retire to next year ? I'm good for it.

I still remember 40-year mortgages, and Fidelity's brokerage-financed mortgage service...

 

[Meadbh]

Last week I spoke with a Canadian who upgraded to a "bargain" holiday home in Hawaii for $750K. I gulped. Only someone who lives in Vancouver could think that $750K is cheap!

 

[kumquat]

The government is tightening rules for mortage lenders in Canada. No more 30 year amortization...and a minimum of 20 % down. (For government insured mortgages).. .Ottawa tightening mortgage rules; no more 30-year amortizations - The Globe and Mail

I beg to differ, see my bolded text. While I like most of the proposals, you may have missed something. Read this part in your attached link.

CIBC economist Benjamin Tal described the changes as a “gentle push,” since the government didn’t make alterations to the minimum downpayment required on mortgages, which stands at 5 per cent.

 

[Frugalityisthenewblack]

You're right kumquat....I should have stated a minimun refinancing at 80% Ottawa caps insured mortgages at 25 years - Business - CBC News

We might have a finance minister who looks like the comedian Nathan lane...but the politician is not joking around!

 

[kombat]

Our government is desperately trying to gently ease down housing prices, in the hopes of avoiding a US-style crash, but many analysts believe that the die is cast and a crash is unavoidable, particularly in chronically-overheated markets like Vancouver and Toronto. Canadians' debt-to-income ratio is over 150%. The average home in Vancouver costs more than 8 times the average income of a Vancouverite. More condos are being built in Toronto than in New York. We're in for a rough ride, when this bubble eventually does pop.

 

[Bestwifeever]

That is the way it should be , here in the US too.

The cool-the-housing-market horse left the US stable about five years ago:

The moves are designed to cool the housing market and limit the record levels of personal debt Canadians have amassed in recent years.

 

[Midpack]

Interesting development, but not that earthshaking capping mortgages at 25 years. Seems reasonable. I wonder how common 15 year mortgages are vs 30 years in the USA (I Googled but didn't find an answer)?

 

[Walt34]

Probably that is the wiser course to take, but I can't help but remember that after my divorce I got into a house in late '85 with a 5%-down FHA-insured loan. Perhaps I'm an outlier in that it was paid off in 14 years although admittedly the first two or three years were a struggle. Although I always kept a minimum of $2k in savings at one point my checking account had literally two cents in it.

 

[Cessna5354]

Used to be a great idea to finance an appreciating asset, but with home market on its head, no more.

Walt, I grew up in Weirton, are you close ?

 

[Walt34]

Walt, I grew up in Weirton, are you close ?

Not even near. We live in the "other panhandle" composed of Morgan, Berkeley, and Jefferson counties. The locals call it the panhandle, I don't know why.

 

[MichaelB]

Walt, I grew up in Weirton, are you close ?

That's where most of my family are from, and still have lots of relatives in the area.

 

[Huston55]

I've always thought it funny--that we Canadians are seen as very liberal in many aspects....but our fiscal policies are more conservative than our neighbours to the south. It is curious.

Our government is desperately trying to gently ease down housing prices, in the hopes of avoiding a US-style crash, but many analysts believe that the die is cast and a crash is unavoidable, particularly in chronically-overheated markets like Vancouver and Toronto. Canadians' debt-to-income ratio is over 150%. The average home in Vancouver costs more than 8 times the average income of a Vancouverite. More condos are being built in Toronto than in New York. We're in for a rough ride, when this bubble eventually does pop.

Policies maybe but, evidently, individual behavior not so much. US personal debt/income peaked at about 130%, whereas Canadian personal debt/income is peaking ~150%.

One thing that unnerves me In these discussions is the comparisons to Japan, which is not a happy slog if that's the path we end up taking.

Not to derail the thread but, what AA and investments would you all make now if you knew with certainty that the Japan-style path is where we're going?

 

[clifp]

Last week I spoke with a Canadian who upgraded to a "bargain" holiday home in Hawaii for $750K. I gulped. Only someone who lives in Vancouver could think that $750K is cheap!

750K is bargain for both Vancouver and Hawaii.

 

[clifp]

I've always thought it funny--that we Canadians are seen as very liberal in many aspects....but our fiscal policies are more conservative than our neighbours to the south. It is curious.

Several years ago I read that Canadian banks were also more conservative than their American counterparts. On the other hand a few weeks ago I got an "opportunity" to invest in a Toronto commercial high-rise and I ran some numbers. I am no expert on commercial real estate and am clueless about Canadian RE, but the numbers looked pretty unattractive.

 

[braumeister]

30 years ago, and maybe still for all I know, 50 year mortgages were common in Germany.

 

[haha]

30 years ago, and maybe still for all I know, 50 year mortgages were common in Germany.

50 years fixed?

 

[Backpacker]

I doubt that Germany has a fixed rate, Canada doesn't offer a fixed rate I know that for sure. Fixed rate mortgages seem to be an american thing.

 

[Chelhxi]

I doubt that Germany has a fixed rate, Canada doesn't offer a fixed rate I know that for sure. Fixed rate mortgages seem to be an american thing.

Umm, we definitely have fixed rates in Canada. Usually 5 year fixed is the max, though I think I've seen 7 occasionally. It's definitely a good thing right now. I sure wouldn't get anything other than a fixed rate when I buy a house later this year.

 

[Backpacker]

Umm, we definitely have fixed rates in Canada. Usually 5 year fixed is the max, though I think I've seen 7 occasionally. It's definitely a good thing right now. I sure wouldn't get anything other than a fixed rate when I buy a house later this year.

Sorry - you are correct it is fixed vs. an Adjustable rate mortgage, but to the typical US consumer a 5 year fixed isnt "fixed" enough for them, they are looking for the entire ammortization term to be fixed.

I live in MI but also own a "camp" in ON, i enjoy talking to my canadian neighbors about the differences in culture. When I talk with them about mortgages they are usually very suprised that we do zero down and lock the rate for 30 years.

 

[Chelhxi]

Sorry - you are correct it is fixed vs. an Adjustable rate mortgage, but to the typical US consumer a 5 year fixed isnt "fixed" enough for them, they are looking for the entire ammortization term to be fixed.

I live in MI but also own a "camp" in ON, i enjoy talking to my canadian neighbors about the differences in culture. When I talk with them about mortgages they are usually very suprised that we do zero down and lock the rate for 30 years.

Ah - so you have educated me, then. I had no idea fixed rate in the US could refer to that long of a time. I don't know how banks or consumers could deal with being locked in for such a long time.