Interesting article on Bloomberg about the private mortgage insurers such as AIG and PMI and how they’re considering what to do in the wake of the government’s decision to stop insuring 40 year and 0% deposit mortgages.

The report highlights some interesting stats on the popularity of the longer mortgages since their introduction in 2006:

40-year loans account for more than 1/3 of new mortgages in Canada

Mortgage loans longer than 25 years represent 9 percent of the market (Canadian Association of Accredited Mortgage Professionals)

About 37 percent of all new mortgages between 2006 and 2007 had amortizations longer than 25 years

AIG estimates 40% of the mortgages they insure have 40-year amortizations

The new rules come into effect on October 15, 2008, however, lenders could continue to offer 40-year loans and zero percent down mortgages under the new rules, though they wouldn’t get financial guarantees from the government, said CAAMP.

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