New Mortgage Rules Cause Refinancing Drop

According to the latest quarterly financial results from the Canada Mortgage and Housing Corporation, mortgage refinancings have dropped significantly since this spring.

Mortgage refinancing insured by the Canada Mortgage and Housing Corporation have dropped by about 40 per cent. This comes after the newest batch of mortgage rules were announced in March, including that the maximum homeowners can borrow from their home through refinancing is 85 per cent of the value of their home, down from 90 per cent.

No one really keeps track of any data on Canadian homeowners and the level at which they refinance their homes, but the 40 per cent drop was revealed due to a new law that requires the Canada Mortgage and Housing Corporation to report its earnings.

In an interview with the Globe and Mail, the CEO of the Canadian Association of Accredited Mortgage Professionals (CAAMP) said that it has become clear that even a five per cent restriction on refinancing has had a large impact.

“There is now obviously less choice for homeowners in terms of their ability to refinance,” he said. “You need flexibility in the system. Homeownership is important, it’s a good public policy.”

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