MORTGAGE POLICY CHANGES
The Mortgage Maan
Changes To The Mortgage Industry Over The Last Ten Years
Over the last ten years, a number of significant mortgage policy changes were made. A great summary of the changes was compiled in the 2017 Annual State of the Residential Mortgage Market in Canada by Mortgage Professionals Canada. The summarized list is provided below and a more detailed breakdown is available in the report at the link above. The first six changes relate to insured mortgages while the most recent in October 2017 applies to all residential mortgages issues by federally regulated financial institutions.
Reduce maximum amortization to 35 years from 40 years. Requirement for minimum 5% down payment.
New loan documentation standards. Establishment of minimum credit scores.
Borrowers with variable-rate mortgages or fixed-rate mortgages with terms less than five years be qualified based on posted rates for 5-year fixed rate mortgages. Reduce maximum insured refinancing to 90% from 95%.
Require 20% down payment for small rental properties
Reduce maximum amortization to 30 years from 35 years. Reduce maximum insured refinancing to 85% from 90%.
Withdraw insurance for Home Equity Lines of Credit
Reduce maximum insured refinancing to 80% from 85%. Elimination of insurance for homes priced over $1 million
Reduce maximum amortization to 25 years from 30 years. Minimum credit scores for 39% GDS and 44% TDS ratios
For homes priced above $500,000, the minimum down payment is 10 per cent on the portion of the price above $500,000.
All insured mortgages must be tested using the 5-year posted rate (this includes low ratio portfolio insured mortgages).
All uninsured mortgages by federally-regulated financial institutions must be tested using the greater of two percentage points above the contracted interest rate or the 5- year posted rate. Lenders are expected to not engage in “co-lending” activities that would circumvent loan-to-value limits.