Thursday, June 21, 2012
Federal Government Changes to Mortgage Lending
For the fourth time in as many years, the Federal Government has announced action to restrict mortgage credit. The new measures include:
•The maximum amortization on a prime mortgage will be reduced from 30 to 25 years.
•Mortgage insurance will not be provided for properties valued over $1 million.
•Refinancing has been lowered from a maximum of 85% loan-to-value to a maximum of 80% loan-to-value.
•The maximum gross debt service (GDS) and total debt service (TDS) will be limited to a maximum of 39% and 44% respectively. Currently, GDS does not apply to qualified borrowers with credit scores over 680.