Is home buying going to become more difficult?

Just when you thought mortgage rules couldn’t be tightened any more, the Office of the Superintendent of Financial Institutions Canada (OSFI) said it’s “looking into” doing just that, by potentially eliminating amortizations over 25 years.

Thanks to last year’s mortgage rule changes, amortizations over 25 years are no longer available to high ratio buyers – or those with less than 20% down. But individuals with larger down payments can still access 30- and 35-year amortizations.

That’s what OSFI is looking to potentially stop. It’s currently consulting with financial institutions on the matter to see if this solution is something that makes sense, and if it could potentially help stabilize the housing market (and its ever-rising prices), curb consumer debt levels and reduce the risk of exposure to rising rates.

It’s a shame that the government is looking to eliminate this mortgage tool as a means of curbing household debt. Individuals already have to qualify for the five-year posted rate at a 25-year amortization – you’d think that would be enough.

That being said, interest rates have been extremely low for quite a while, and the housing market seems to have resisted previous attempts to cool it down. Finance Minister Jim Flaherty – along with the Bank of Canada – have repeatedly expressed concern over the housing market. They’d rather see a soft landing than a bust – and really, who can blame them?

If you’re in the market for a new home or refinance, and were hoping for an amortization longer than 25 years, you may want to give us a call sooner rather than later. You never know when the rules are going to change again!