By now you've heard hear or elsewhere that Canada will be faced with new/old mortgage rules as of July 9th.

Economists are calculating that these rules are effectively adding 1% to today's interest rates and the Finance Minister has admitted that his decision came based on witnessing Toronto's booming market.

Yes, this will especially effect first time home buyers and already analysts are predicting the move will hurt those in communities throughout Canada just recovering from 2008 moreso than Vancouver/Toronto (ie. Abbotsford/Chilliwack).

Yes, this needed to be done. The troubling aspect of this, however, is that in 2006 we were on a healthy growth cycle. Back then, there was no such thing as a CMHC-backed 0 down mortgage or 30-year amortization. Home prices were rising, but were doing so because the market was healthy.

In May 2006 the newly elected government introduced the government-insured 0-down, 40-year mortgage in a move that was heading towards an American-like sub-prime system. Between 2006 and 2008 home prices skyrocketed as those who previously could not afford homes could now stretch out their budget.

In 2008 the American and Canadian housing market collapsed, but due to a centralized banking system, and years of financial prudence in the 90s and early 2000s let Canada escape the worst of it.

But while Vancouver and Toronto bounced back, the media paid no attention to the majority of Canadian markets. As Vancouver went back to multiple bids and skyrocketing prices, no articles were written about outlying suburban homeowners who were losing upwards of 20% on condos they bought just 1 year earlier due to an oversaturated market.

Furthermore, the current spin is that this move back to 25-year mortgages is in the name of financial prudence. It is actually an admittance of wrong-doing by the current government. After instigating an unhealthy market, the government has rapidly moved to undo their original 2006 budget, effectively admitting their irresponsible actions.

If you have any questions regarding the new mortgage rules, please contact myself and I can certainly answer them or have one of my mortgage experts get into the technical details and/or help you beat the new rules.

***The opinions above are those of my own and do not represent those of Macdonald Realty or Macdonald Realty 1st Pioneer.***

See Facebook page comment section for links regarding the new rules.

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