Bob Truman, First Place Realty

I like it. Should have been implemented years ago, but at least it's a step in the right direction. The non-owner occupied property change could have the largest impact, but who's going to tell the truth about that anyways?

With consumer debt and mortgage levels at all time highs, it's just a matter of time before they put the brakes on this out of control train of consequences... before it hits the wall.

I really think these changes really will not have any effect on the market here in Calgary. I do believe the Key lies in interest rates and Employment .

I have heard from others at work that they are looking at locking in their mortgage rate to 5 year terms while its cheap to do so. Also one guy said he received a letter from the back that they are uping his LOC rate. So I do believe the changes are coming but the gov is looking at tweaking things slowly to avoid a market collapse in housing which would be damaging to the overall economy .  

When I first heard about these changes on the radio I thought they were going to be pretty big. THey were initially saying that the downpayment would increase and total mortgage amounts were limited. That was a fairly extreme overstatement.

As it turns out the only real effect I think will be to deter future real estate speculators who are buying multiple properties and frankly it was already hard for them to only put 5% down on a second house. It doesn't even do anything to the ones who already own multiple properties. Refinancing 95% of your house is bonkers and so is 90%.

The approval for the fixed vs variable rate is another no brainer. Those people would very likely default within months of any interest rate increase and the number of buyers in the Canadian market like that is routinely overestimated. What bank is going to give you a loan which they know you'll go arrears on in a few months? If you were that bad off to start with you would never get "prime minus" or even "prime" so adjusting it at the 5 year rate isn't too far off from the way things are now.

It's a healthy move overall but probably not enough in my opinion. I would rather see a reduction in amortization to 25 years and a phased in minimum downpayment to 10% over the next couple of years. Canada is at really high risk of a China-style real estate asset class bubble in the coming years and I think this is not yet appreciated by the higher ups. They need to look beyond the next election cycle on this one.

What is funny is that when I was applying for a mortgage 4 months go, the bank (RBC) already was checking to see if I could afford a 5 year fixed rate at the POSTED rate, which is higher than the special rates they routinely have.  Basically, the mortgage manager made sure that I could afford a hypothetical scenario and then gave me a preapproval based on that.  Sounds a lot like what Ottawa wants now, except it was 4 months ago.  Then again this was RBC, who are notoriously difficult to obtain high leverage loans from.  Maybe I should have gone to Scotia just to see the difference.

So how do these "changes" really change things that much if some banks were already being prudent?