New Mortgage Rules

(original Release Date June 22 2012)

The Hamilton-Halton Home Builders’ Association (HHHBA) is concerned about the mortgage rule change announced yesterday (June 21st 2012) by Jim Flaherty, Canada’s Minister of Finance. The most important element of the change is the reduction of the amortization period to 25 years. HHHBA supports a prudent approach in terms of mortgage lending and mortgage insurance and acknowledges the importance of decreasing the high level of household debt. The issue of high debt levels and high-risk mortgages should be dealt with precise tools related directly to each individual homebuyer, for example, further limiting debt ratios and raising the minimum credit scores at the mortgage application level.

“The reduction of the amortization period will negatively impact all first-time homebuyers who need mortgage insurance, even the ones with low debt levels and good credit. In our industry, when a job requires a shovel, we don’t use an excavator; why do it in finance?” asks Carla Agostino, President of the Hamilton-Halton Home Builders’ Association.

Today in Hamilton, the average price of a property is $355,000. A homeowner purchasing such a property with a 30-year amortization will have monthly mortgage payments of $1,827.08. With a 25-year mortgage, this monthly payment goes up to $1,961.46. This is a difference of $134.38 per month and more than $1,600 per year. HHHBA understands lowering the amortization period will save homeowners thousands of dollars during the length of their mortgage payments, but first time homebuyers need extra financial options earlier on in their lives. Young homeowners are the ones creating households and starting families.

“This new mortgage rule change takes away payment flexibility that is needed by
many younger homebuyers. I am disappointed to see that such a broad-based
measure has been taken, instead of using more precise indicators related to
each homebuyer’s financial capacity,” says HHHBA Executive Officer Mathieu

The Hamilton-Halton Home Builders’ Association is the voice of the residential
construction industry in the Hamilton-Halton region representing 250 member
companies. The HHHBA is proudly affiliated with the Ontario and Canadian
Home Builders’ Associations.

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