From my perspective it`s not necessarily the size of mortgages that the consumers have that is the main debt problem but rather consumer debt like credit cards, lines of credit, crazy car payments, etc.
You`d be amazed by some of the things I see.
QUOTE (ThomasBeyer @ Feb 18 2010, 07:07 PM) minimal impact as most home buyers are not investors !
These new regulations will provide a less levered consumer, a slightly cooler house price growth and a more cautious borrower.
More specifically, CMHC announced the following changes on Tuesday, Feb. 16, 2010 :
• Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
• Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
• Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
This will mean more people will chose to rent a while longer as they may not qualify for new mortgages.
I think Flaherty could have gone the extra step and requiring a minimum 10% down payment as many people are too stretched with 95% mortgage, plus CMHC premium, i.e. essentially homes with 0 equity in them."
If you wish to live in a $400,000 home you should either have $40,000 cash to buy it, or buy a smaller home or rent a while longer. Many folks are too levered or too stretched, and this announcement on Tuesday was a step in the right direction, but did not go far enough. Look what happened in the US, Ireland or the UK, where property prices dropped considerably more than in Canada, primarily due to excessive or too loosely regulated lending practices. Renting still has a stigma in Canada .. a stigma that does not exist in Europe or Quebec where renting is the economic choice of many because it makes far more sense than buying an over-levered, too expensive home.