Existing government rules and Canadian banks’ underwriting guidelines function to support borrowers so they can afford to repay the mortgages. In April 2010 there were policy changes to sustain stability:
1. To help borrowers prepare for higher interest rates in the future, they must meet the standards for a five year fixed rate mortgage applicable to loans that have a lower rate and shorter term.
2. Borrowers may refinance their home to 90% from 95% in turn making it less likely that they would owe more than the property is worth should housing prices fall
3. To reduce speculation; buyers of non-owned occupied rental properties must invest 20% of the purchase price for an insured mortgage. Previously, only 5% required.
According to the Canada Housing and Mortgage Corporation’s 2010 Mortgage Consumer Survey, Canadian borrowers are predominantly mortgage savvy and confident in their purchase. 90% of first time home buyers say they made a sound decision based on a good understanding of their options and what is available to them, 81% of home buyers felt comfortable with their mortgage debt and 92% agreed that “homeownership” is a good long-term investment.
