Monday, December 21, 2009
Flaherty warns on mortgage rules
Finance minister tells CTV, Ottawa may raise minimum down payment for home buyers and reduce amortization period to stop some from taking on too much debt. CTV says Ottawa is considering raising the minimum down payment for home buyers as well as reducing the amortization period in order to stop some consumers from taking on too much debt. In an interview with CTV Question Period, to be aired next week, Finance Minister Jim Flaherty says the measures will be taken if there's evidence of excessive demand in the housing market. Flaherty says the new measures would target consumers “who are taking on obligations that they will not be able to handle in the future when the interest rates do rise.” He says the likely measures the government will take is to increase the size of the down payment from 5 per cent “to a higher figure” and to reduce the amortization period “from a maximum of 35 years to something less.” Those measures would increase the monthly payments, making it more difficult for some people to take on a mortgage and purchase a home, without having to increase the interest rate. Last week, the central bank warned that when interest rates rise to normal levels, up to 10 per cent of households could face difficulties in meeting monthly payment requirements.