- Home Equity Line of Credit mortgages reduced from 80% financing to 65% financing.
- Lines of credit to be either amortized, or amortized after a specified period of time.
- More stringent income requirements for self-employed borrowers.
- All mortgages to be reviewed upon renewal (currently as long as payments are made, it is unlikely for a bank not to offer a renewal to a client).
- Funds from cashback mortgages are not allowed as a source of down payment
- Use of the five-year posted “benchmark” to qualify uninsured terms of one to four years and all variable terms (currently most lenders use a three-year posted or a lower rate to qualify uninsured mortgage).
- More limits on underwriting exceptions.
- Home insurance to be included in debt-servicing ratios (it is currently not included.)
- More public disclosure of statistics pertaining to institutions’ mortgage practices.
- More accountability from management to ensure lenders are adhering to their underwriting guidelines.
"The country’s biggest banks were caught off guard on Wednesday night as the Department of Finance prepared to clamp down on mortgages by reducing the maximum amortization for a government-insured mortgage to 25 years from 30.
Ottawa will also limit the amount of equity that can be borrowed against a home to 80 per cent of the property’s value, down from 85 per cent.
Ottawa will announce two other changes, according to a source. It will no longer allow high-ratio mortgages over $1-million, and it will cap the gross debt service (which looks at a consumer’s total debt payments as a percentage of their income) at 39 per cent.”
Click 'comments' below to contribute to this post.