The changes will see the government lower the maximum Canadians can borrow against their home to 80% of its value, from 85%, in an effort to encourage them to keep more equity in their homes.

As well, under the new rules, to qualify for a mortgage loan Canadians can spend a maximum of 39% of their gross household income on home expenses such as mortgage, property taxes and heating, and a maximum 44 per cent of income on housing expenses and all other debt.

Flaherty also announced Ottawa will limit government-backed insured mortgages to home purchases of less than $1-million.

A downpayment of at least 20% will be required on mortgage loans for homes priced at or above $1-million. financial post

This will be interesting.

These are relatively minor changes but, in an overheated, underfunded Canadian housing market they represent a blast of chilly air.

Now, there are prayers for a soft landing with housing prices dropping nationally maybe 10-15% and in Vancouver and Toronto, maybe 20-25%. Will those prayers be answered?

In Victoria, where I live, prices are down between 10-15% and houses in the sub-million range are turning over fairly steadily. Up Island not much is selling and what is tends to be 20-25% below original asking.. Vancouver is teetering and listing are way up. And so it goes.

Even a minor interest rate hike or a bit of a Euro panic or a minor China contraction and the market is ready to go into the long dive.



3 thoughts on “Plop!

  1. John says:

    Jay: your blog just ate a reply of mine (possibly due to the number of links I had in it). Can you please pull it out of the spam filter.


  2. John says:

    Jay: Sorry, please delete the above. I see that you have moderation turned on (for some reason I thought you didn’t).

    I assume you will release it when you get the chance.


  3. Oh well. My home is paid for. May not be screaming heck to look at, but I only have to worry about upkeep.

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