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In July of 2012, the federal government implemented new, tougher regulations surrounding mortgages, including shortening the maximum amortization period on insured mortgages from 30 to 25 years, and limiting refinancing to 80% of a home’s value, from the previous 85%. The new guidelines were instituted as a measure to cool what was feared to be an overheating housing market. Shorter amortization periods have proven to have a significant impact on first-time home buyers, effectively increasing the monthly payment on a given mortgage.
Jim Murphy, the head of the Canadian Association of Accredited Mortgage Professionals (CAAMP) recently made efforts to convince finance department officials that the new regulations were a step too far. His suggestions are to resume insuring mortgages with 30 year amortizations (with the caveat that the borrower must qualify for a 25 year amortization) and to increase the $750 tax credit that first-time buyers receive.
Although the finance department has not released a comment at this time, it is the belief that the likelihood of these steps being taken is low. Finance Minister Jim Flaherty has previously stated that he is pleased with the results that tightening the mortgage legislation has produced, and that his concern for inflating house prices remains.