It’s been a year since the Government of Canada last implemented changes to the mortgage rules. Since March of 2011, when the rules went into effect, there has been a slow down in the refinance market, yet home sales have not been seriously affected.  Then the government warned Canadians about increasing debt loads and there were worries around specific mortgage products and loose qualifying criteria for self-employed individuals and for new immigrants. Many lenders pulled their Stated Income programs for these groups. With the bond market reacting to the economic crisis in Europe and the U.S. slowdown, the fixed rate dropped to record lows and lenders started to eliminate discounts on their variable rates.

House prices have stabilized; the economy is showing modest growth and the Bank of Canada may start increasing its prime lending rate at the end of 2012. While some of the changes have impacted the market, there are still a number of mortgage products available. Let’s take a look at what’s gone and what’s left.
Here’s a recap of the changes:

•  The maximum amortization period for mortgages was reduced to 30 years from 35 years for insured mortgages with loan-to-value ratios of more than 80 per cent. This made it more difficult for some first time home buyers to qualify for a mortgage but also reduces the total lifetime interest payments families make on their mortgages.

• The maximum amount home owners can borrow to refinance their mortgages went from 90% to 85% of the value of their homes. Refinancing was a tool used by many homeowners to consolidate their high interest debts.

•  Government insurance backings on lines of credit secured by homes were withdrawn.

•  The Canadian Housing and Mortgage Authority’s (CMHC) funding cap has almost been reached. CMHC is the provider of government-backed mortgage loan insurance. Because the government will not increase that cap, CMHC will no longer bulk insure mortgages for lenders. The result is that CMHC will curtail its activity, which might make it more challenging to get approved for a high-ratio loan.

So what is left? Lots!

•  A few lenders still offer 35 year amortizations.

•  Lenders still offer Purchase Plus products for renovations, on both new purchases and on refinances.

•  Cash Back products are still available that help buyers with down payments and closing costs.

•  First time home buyers can still qualify for a mortgage if they borrow the down payment.

•  Stated income products are still available for the self-employed through a few lenders

•  Lines of credit are still available but are not insured.

•  A few lenders are starting to discount their variable rates.

Everyone has a unique situation. To find a product that works for you, talk to a mortgage professional.