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Word On The Street

Have you recently heard that to buy a home in Canada now you need to have a 10% down payment?

Fortunately for home buyers that is NOT true. Since the Canadian Governmentmost recentlychanged the mortgage rules in March of this year, there have not been any subsequent changes.

To recap, the changes that came into effect this year were:

1.The maximum amortization for high ratio mortgages (less than a 20% down payment) was changed to 30 years from 35.

2.The maximum amount you can refinance now is 85% of your home value. This was a decrease from 90% before.

3.CMHC decided to no longer insure Home Equity Lines of Credit or HELOC’s

These were the only changes that came into effect this year.

Interest Rates

Fixed interest rates saw a spike across the board in the past 2 weeks as a result of bond yields increasing steadily in the short term.

The major banks increased their 5 year fixed rates slightly over the past week and most smaller lenders followed suit with small tweaks to their rates.Interestingly RBC this week quietly decreased their fixed rates again. We can expect fixed  rates to remain low for the short term barring any unforeseen improvement in the global economic outlook.

Variable rates remain strong with Prime at 3.00% and discounts from Prime that give you an interest rate of 2.25%.Predictions for the next increase in the Prime Rate range from October to early into next year. This makes the case for variable rates with higher payments compelling at least for the time being.

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