Quote:
Originally Posted by ken0042
Holy crap! What happens if somebody bought a place intended for a rental last month, but it isn't scheduled for completion until 2011? They would need to come up with the other 15% down, or lose the 5% they already put down on it?
I saw a little bit about this on the news, and the finance minister was talking about how Canadians are doing better than the rest of the world with repect to fewer mortgage defaults. I didn't think by the way he was talking that the gov't was going to stick its nose into our business more than it needs to.
Seriously, who does this help aside from CMHC?
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That's a good question. I'll see if I can find out if purchases made before April 19 will be grandfathered in.
Yeah I am kind of surprised they are sticking their noses in again as well. In October of 2008 they made some changes that reduced amortizations from 40 years to 35, and also got rid of zero down mortgages. Those changes I don't have a problem with really, I think you should have some of your own equity to be able to buy a place.
The changes announced today are pretty tame compared to what they were threatenting. If they had changed the down payment to 10% on primary residences and decreased amortizations even further to 25 years it would have taken a lot of people out of the market and perhaps hurt the market more than they would have helped it.
Today's announcement makes sense to me. Really they are just tightening things up a bit to try and make sure people aren't getting in over their heads. People really shouldn't be refinancing up to 95% of the value of their home. You need some equity in your house in case prices go down and you do need to sell. Between payout penalties, realtor fees etc... you can easily owe money after you sell your place. Not to mention you shouldn't be using the equity in your home as a personal ATM to buy cars, boats, vacations etc...
Making people qualify at the 5 year fixed rate when they are applying for a variable makes sense. It just ensures they are able to handle the payments down the road when variable rates to eventually start to climb.
For the investment property changes I think they are just trying to weed out the speculators from the serious investors. They are trying to prevent mini bubbles from forming especially in the pre built condo market where people just buy a bunch of units in a building before they even start construction hoping they can flip them for a profit before they even take posession or as soon as they take posession. As we have seen in the Calgary market when prices drop over the construction period lots of people are left owning condos that aren't worth what they paid for them and have to rent them out.