The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.
Starting almost immediately lenders can only issue home equity loans up to a maximum of 80 per cent of a property's value - down from 85 per cent. And anyone wanting to buy a home worth more than $1 million, for instance, must now have a down payment of at least $200,000.
Recent surveys show that most Canadians are unaware of the majority of the mortgage changes and how it can affect them. If a homeowner changed financial institutions for refinancing they would have to meet the current guidelines, which could mean a reduction in amortization and increase in payments. If an individual had to change banks and also had a reduction of income, they could fail to meet the new requirements.
The central bank's often-repeated message that interest rates are likely to rise, coupled with persistent warnings from the Bank of Canada about growing household debt levels has guaranteed that home owners will have to pay more for their mortgages. Banks have all increased their rates on variable mortgages to remove any incentive for home owners to choose a variable rate mortgage. This comes again after record earnings by all the major Canadian Banks. Many home owners enjoyed a savings on their variable rate mortgages until shut down by Canadian Banks.
The central bank's current guidance on monetary policy suggests that it may be necessary to raise interest rates modestly at some point in the future. The only reason Canadian Banks are not going on an interest rate binge is the US and Europe's low interest rates. Whenever things become normal in the world the Banks will be jacking up the rates to make up for lost time.
If you're a well-qualified borrower, you'll be happy to know that you just became more appealing to lenders. These rules will shrink the pool of prime borrowers. As a result, we'll see bankers and brokers battle harder for your business. That means the rate wars that Flaherty "discourages" will intensify, whether banks publicize it or not.
Shorter amortizations, higher qualification rates and lower debt ratio limits will restrict buying power. To that, Flaherty says: "Good. I consider that desirable." Canada's 9.6 million existing homeowners, however, may not deem it so desirable-not if these actions trigger a bigger or longer-than-normal selloff that jeopardizes their home equity.
Starting almost immediately lenders can only issue home equity loans up to a maximum of 80 per cent of a property's value - down from 85 per cent. And anyone wanting to buy a home worth more than $1 million, for instance, must now have a down payment of at least $200,000.
Recent surveys show that most Canadians are unaware of the majority of the mortgage changes and how it can affect them. If a homeowner changed financial institutions for refinancing they would have to meet the current guidelines, which could mean a reduction in amortization and increase in payments. If an individual had to change banks and also had a reduction of income, they could fail to meet the new requirements.
The central bank's often-repeated message that interest rates are likely to rise, coupled with persistent warnings from the Bank of Canada about growing household debt levels has guaranteed that home owners will have to pay more for their mortgages. Banks have all increased their rates on variable mortgages to remove any incentive for home owners to choose a variable rate mortgage. This comes again after record earnings by all the major Canadian Banks. Many home owners enjoyed a savings on their variable rate mortgages until shut down by Canadian Banks.
The central bank's current guidance on monetary policy suggests that it may be necessary to raise interest rates modestly at some point in the future. The only reason Canadian Banks are not going on an interest rate binge is the US and Europe's low interest rates. Whenever things become normal in the world the Banks will be jacking up the rates to make up for lost time.
If you're a well-qualified borrower, you'll be happy to know that you just became more appealing to lenders. These rules will shrink the pool of prime borrowers. As a result, we'll see bankers and brokers battle harder for your business. That means the rate wars that Flaherty "discourages" will intensify, whether banks publicize it or not.
Shorter amortizations, higher qualification rates and lower debt ratio limits will restrict buying power. To that, Flaherty says: "Good. I consider that desirable." Canada's 9.6 million existing homeowners, however, may not deem it so desirable-not if these actions trigger a bigger or longer-than-normal selloff that jeopardizes their home equity.
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