http://www.reuters.com/article/idUSN2123342920091221
Canada may require higher mortgage downpayments-TV
Mon Dec 21, 2009 11:21am EST* Finance minister concerned debt levels may get too high
OTTAWA, Dec 21 (Reuters) – Canada may require people taking out mortgages to come up with a larger downpayment if it looks like indebtedness is getting too high, Finance Minister Jim Flaherty said in a interview released late on Sunday.
Flaherty’s remarks echoed concerns voiced last week by Bank of Canada Governor Mark Carney about households’ ability to pay down debt. Household debt relative to income has risen sharply though it is below U.S. and British levels, and Carney warned consumers not to assume that interest rates will stay low.
“If we see further evidence that there is excessive demand in the housing market or that there’s an indication that people are taking on obligations that they will not be able to handle in the future when interest rates rise, then we will take some action,” CTV television quoted Flaherty as saying.
“The likely action we will take is to increase the size of the downpayment from 5 per cent to a higher number, reduce the amortization — bring it down from 35 years to something less.”
Shortening the amortization period would mean mortgage payments would have to go up to pay the loan off more quickly, and might make people think twice about taking on more debt.
The interview with Flaherty is expected to air on the program Question Period on Sunday. (Reporting by Randall Palmer; editing by Rob Wilson)
One of the benefits of buying real estate is leverage; leverage allows an real estate investor to use less Capital (money) to control more Real Estate (assets). This article gives indicators that the Canadian government will be making it harder for real estate investors to acquire real estate. The good part about this potential federal lending practice change is they are doing this so they don’t have to raise interest rates…which will help people who already own properties.
If coming up with a down payment has been holding you back from buying a home or investment property, CLICK HERE now to pre-qualify yourself for a mortgage with a low down payment.
Brad Gavin
Mortgage Consultant
MBN Mortgage Ltd (associated with Mortgage Intelligence)
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