Banks Will Tighten Up On Mortgage Amortization Periods
“Canadian Mortgage Lenders Take Further Steps To Reduce Long Term Mortgage Risks”
This week most of the major banks in Canada announced that they are going to be dropping the amortization period on residential property mortgages from 35 years to 30 years during April of 2011 regardless if the mortgage falls into the high ratio or low ratio mortgage categories.
While not all primary mortgage lenders have announced this change, you can expect that the industry, as it typically does, will have all members follow suit, especially after such a significant change in the mortgage lending policy.
This move along with several others this year already announced by CMHC on the insured mortgage lending front, continue to demonstrate that the Canadian market is concerned about the massive fall out in residential property financing all over the world and do not want to fallow suit.
Well established financial markets in the U.S. and U.K. have both recently tanked, clearly demonstrating to all along the way that first world financial economies are not immune to massive fall out in the residential mortgage markets.
From a consumer point of view, this means more cash flow is going to need to be available to qualify for mortgages of any risk level when a long term amortization period is being sought.
In the big scheme of things, this is still going to likely only have a significant impact on small percentage of the market, but taken it collectively with the other changes that have occurred and its now becoming a bit more difficult to get a residential mortgage in Canada.
At the same time, statistics show that borrowers on average are becoming more proactive with their long term debt load and are paying down more principal ahead of schedule than in any previous time in the past, speaking to a change in consumer perception about debt as well.
And even though the Canadian market has been able to weather the global economic storm better than most, you can expect that further tweets and adjustments may still be coming in the future to provide further stability to the overall market.
If you’d like more information on mortgage amortization terms and how they may impact your mortgage or future plans, give me a call and we can discuss your situation in sufficient detail.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel