New mortgage rules effective July 9

Just a reminder that the new mortgage rules take effect next week, on Monday July 9, when the maximum amortization will become 25 years (from 30) and the maximum refinance amount will be set at 80 per cent loan to value (from 85). You should get in touch with me or your mortgage provider if:


  • you are buying a home or have a mortgage pre-approval. You must have an offer to purchase before July 9 to take advantage of a 30 year amortization;
  • you want to refinance to consolidate your high interest debt to lower your interest costs and boost your monthly cash flow. You cannot refinance above 80 per cent unless you have a refinancing agreement dated prior to July 9; or,
  • you are an existing homeowner, and want a review of your situation. The new measures will only apply if you need to increase the amount of your insured mortgage.


If you have an offer to purchase or refinancing agreement dated between June 22, 2012 and July 9, 2012, you can take advantage of the old rules provided final disbursement is made before December 31, 2012.


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Today’s Bank of Canada rate hold announcement marks almost four straight years that the key benchmark rate has remained unchanged, since September 8, 2010. Great news if you have a variable-rate mortgage or home equity line of credit; the prime rate stays at 3%.


The announcement noted that “the risks to the outlook for inflation remain roughly balanced, while the risks associated with household imbalances have not diminished.” With these considerations, the Bank is maintaining its monetary policy stimulus, and remains neutral with respect to the timing and direction of the next change.


The next rate-setting day is October 22nd.

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