After much speculation, the new mortgage rules were introduced today. The maximum amortization has been reduced from 30 years back to 25 years and maximum loan reduced from 85% to 80%.
Regarding the amortization period, it is interesting to see that we went from 25 years a few years ago to 40 years, back down to 35, to 30 and now back to a 25 year max again.. This will make payments larger and affordability tighter. The total debt service ratio will now be set at 44%.
These changes will make it even more difficult for people to buy a home or upgrade. But really, in a financial planning perspective, this will help people stay honest about what they really can afford. You can expect these new rules to also contribute to the cooling off of our overheating Real Estate market.