I came across a great article by Canadian Real Estate Wealth titled Investors could be hardest hit by amortization cap, sharing some insights on Flaherty’s proposed changes to reduce conventional amoritzations to 25 years. The article goes on to say
“Small property investors could soon find themselves with considerably less money to renovate new purchases if Jim Flaherty succeeds in winning a 25-year amortization cap on conventional mortgages.”
“Flaherty and OSFI are reportedly considering the tighter mortgage rule as a way of further slowing the real estate market, which has already quieted down since Flaherty’s decision last summer to, among other things, reduce the maximum amortization for high-ratio mortgages to 25 years.”
As an Alberta mortgage broker, we are seeing a lot of 30 year amortizations and in few cases even 35, however, 35 is only offered by a select few. A reduction would definitely impact housing and that worries me. What I find interesting is that Flaherty makes these suggestions in the media, yet in a article published this morning by the Financial Post, Flaherty is quoted as saying “I’m not going to intervene in the mortgage market, I don’t need to”. Interesting… Full article Flaherty dismisses worries over housing market amid ‘healthy’ correction
Let me say this, Flaherty has no business tinkering in the mortgage market at this point-he has done enough, in my opinion. Time to let all the changes work their way through the system and allow the banks to due there own due diligence. If the banks do like the risk, they have the choice to scale the amortization back on their own, they don’t need more governence.
Please leave me with your thoughts on these developments. What do you see happen if Flaherty is successful in reducing conventional amortizations?