CMHC Limits refi's to 80%

 

 

 

 

At 8:15 am Finance Minister, Jim Flaherty has announced four changes to mortgage insurance rules.

·         Maximum Amortizations go to 25 yrs;

• mortgage insurance for properties over $1 million;
•  Refinancings reduced to 80%
• TDS and GDS  at 44 and 39%

http://www.theglobeandmail.com/report-on-business/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/

Effective date for these changes will be July 9^th 2012.

The Maximum 80% refinances is by far the most significant change that will affect most Canadian Homeowners.

 

CMHC has officially stepped out of the mortgage refinance business.

 

Looks like CMHC is only in it for Purchases at the moment.

 

Yet to be announced is whether Genworth or Canada Guaranty, the 2 privately run mortgage insurance companies will follow suit.   Genworth has already once in the past not followed CMHC’s policies changes with maintaining the previous stated income policy.   So they might not necessarily follow this move.  I am sure an announcement will follow shortly.

 

OSFI is also coming out with their announcement later today, word on the street is the qualifying renewals is off the table, but the Lines of Credit limits being reduced to 65% is likely to be implemented.  I will send an email once they are announced.

 

If this is not enough changes to consider I have one more, First Line Mortgages, previously one of the largest lenders used by Mortgage Brokers is closing their doors effective July 1 2012.

 

It’s never good when we lose a lender, as it takes options away from clients, and reduces competition in the Market place. 

 

Any commitments made by First Line will remain in place and will close, but as of July 1 2012 no new business will be accepted.

 

 

There you have it, possibly one of the busiest days in our mortgage world.

 

Throughout all of this, rates have remained unchanged at the moment, but we are waiting for the bond market’s ration to these changes to see what pressure will be put on rates.   

 

Thanks,
 
David Kendall
 
Mortgage Agent
License # M08004045
 
211 York Road, Unit 3, Dundas, Ont. L9H 1M9
OAC Mortgages Brokerage License # 10928
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