If you’ve just returned from holiday in the Caymans, and didn’t have your BlackBerry with you on the beach, you may not have yet heard that Finance Minister Jim Flaherty announced 3 main mortgage rule changes that will go into effect on April 19, 2010. If you were here, then you know this has been all over the news and there is some confusion with the details, and how they will impact the mortgage industry.
We listed the main points on why these rules won’t have a huge impact, and the biggest question coming out of this is what 5 year rate will be used to qualify applicants?
The government has issued a statement that they will clarify this “shortly”. Although a lot of lenders are saying that they were already using higher rates, such as the 3 year fixed rates, to qualify people on lower variable and fixed rates. The 3 year rate they were using was the one available to them – the lender. Which make sense. You’re not really able to apply a 3 year rate that you don’t have access to.
If that’s the case, then logic presumes, that the same rule will be applied to a 5 year rate. Although as these changes are analyzed more in-depth it seems that they might have been rushed through without a thorough investigation into the effects, and without mortgage expert input.
So we wait and see what happens. There you go – you’re now updated and can go and put some aloe on that burn.