Canada's finance ministry has announced that it will reduce the maximum amortization period for a government-backed insured mortgage from 30 years to 25 years. Furthermore, Ottawa is limiting government-backed insured mortgages to home purchases of less than C$1 million.
The Financial Post reports that the government's decision is based on concerns that Canada's housing market is showing signs of overheating while household debt levels are rising sharply. The changes take effect July 9.
‘Our government stands behind the efforts of hard-working Canadian families to save by investing in their homes and their future,’ says Finance Minister Jim Flaherty. ‘The adjustments we are making today will help them realize their goals, build on the previous measures we have introduced to keep the housing market strong, and help to ensure households do not become overextended.’