First National’s response to the announcement from the federal government on the new mortgage requirements
Oct 4, 2016, 11:04 AM
On Monday, October 3, 2016, the Government of Canada announced changes to mortgage insurance rules. Effective October 17, 2016, all insured mortgages will now use the Bank of Canada five-year mortgage rate when calculating affordability tests. New criteria for conventional mortgages were introduced to mirror criteria already used for high ratio mortgages. These include: limiting insurance to purchase transactions on owner occupied properties; a maximum amortization of 25 years; and a maximum property value of $1 million. After a brief transition period, the new rules will be effective November 30, 2016. Borrowers and brokers should expect a series of changes to product offerings and pricing over the coming days as the market adjusts to the new regulations.
In the same announcement, the Government introduced new requirements for taxpayers to report sales of principal residences even if they intend on using the principal residence exemption from capital gains tax. Permanent non-residents will now be disallowed from using the exemption.