Finance Minister Jim Flaherty would be smart to put some new restrictions on mortgages

(Source: Toronto Sun)

Many would-be homeowners believe they will be punished if new mortgage limitations suggested by Canada’s finance minister come into effect in 2010.

But Jim Flaherty’s idea to potentially lower amortization periods, while also increasing minimum down payments, is not a punishment. Rather, it would protect some people from themselves. The target group is made up of overzealous, and underfunded, would-be homeowners.

As the housing market recovery in Toronto edges toward bubble-territory, the finance minister announced last week that, should the market become overheated in the new year, steps might be taken to ease the frenzy, including lowering the maximum amortization period from its current 35 years to “something lower,” and raising the minimum down payment from 5% to “something higher.”

Many industry watchers speculate this would mean a minimum 10% down payment and a maximum amortization of 30 years.

Read Rachel Sa’s full article “Real estate reality check needed” in the Toronto Sun (January 3, 2009).

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