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New mortgage rules begin

New federal rules for Canadian mortgages have now gone into effect.

The changes affect properties that cost more than $500,000 — a small percentage of the overall market.

Buyers can still have a five per cent down payment on the first $500,000 of a home purchase but must now put at least 10 per cent down on the portion above $500,000.

Finance Minister Bill Morneau has said the new measure — effective Monday — aims to ensure buyers have sufficient equity in their homes.

Lenders also face new capital requirements to keep pace with the growing risk of the real estate markets that they bankroll.

And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.

The Finance Department has tightened mortgage rules on several occasions in recent years — along with requiring stricter enforcement and management of loans — to weed out marginal buyers and speculators.



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