As anticipated in CREA’s recent call to action, the government announced this week three loan financing changes designed to address concerns about increasing levels of household debt.

First, the government will reduce the maximum mortgage amortization period from 35 to 30 years. Second, the maximum amount of the value of a home that can be re-financed will drop from 90 per cent to 85 per cent. And finally, government insurance will no longer be available to financial institutions wishing to insure home equity lines of credit.

Together, these three measures are designed to ensure homebuyers invest responsibly in home ownership and don’t risk their financial security by buying too much home for their income or the country’s economic circumstance.

It is important to note, the government did not increase the minimum down payment, which was under consideration. And the reduction of five years to the amortization period is understood, given there was a possibility of a larger reduction.