Real Estate has been in the news a lot lately and not just the usual speculation on the hot market. The Federal Government has made significant changes to the rules of mortgage lending. A borrower must now qualify for the banks posted 5 year rate even if they choose a lower rate like the variable rate. This is intended to protect the home buyer if (when) rates go up.
People buying properties that will not be owner occupied will now have to have 20% down instead of the current 5%. This is to deter the flipping of properties especially condos where investors will buy up a block of suites with the minimum down and then flip them at a profit once the building is completed.
People will also only be able to finance 90% of the value of their home when refinancing. This is meant to prevent people from using the equity of their homes like an ATM.
For now the Gov't has not changed the 5% down payment rule nor shortened the 35 year amortization rate. Those changes could still come in the not so distant future.
My opinion is that these are positive changes for the market. We certainly do not want to see a collapse of our stable real estate market similar to what happened in the U.S. Some areas lost 70% of their value due to the large number of foreclosures and the tightening of the banks lending policies. If you cannot get approved at todays rates you probably shouldn't be buying a home. Rates will go up. Hopefully slowly and not too high. I'm old enough to remember paying 19.25% for a 6 month period in the 80's. Luckily in those days the purchase price of the house was only $52,500 but my mortgage payment still went from $518 month to over $800. I don't want to figure out what a $300,000 mortgage would cost at those rates. Do the math if you dare.