Ottawa tightens up mortgage rules to calm the hot, hot housing market

The runaway real estate market in Canadian cities (and whispers and shouts of bubble trouble) is worrying Finance Minister Jim Flaherty enough that he’s again introducing new mortgage rules. Among the new measures, which kick in July 9: the amortization period for a government-insured mortgage will max out at 25 years, rather than 30; the maximum amount homeowners can borrow against their homes will be reduced from 85 to 80 per cent; and only homes with a purchase price under $1 million will be eligible for government-backed mortgages. Flaherty specifically singled out the increasingly absurd condo markets in cities like Toronto as cause for unease—but a recent Globe and Mail article suggests developers and some industry experts still aren’t concerned about things going south. The general belief is that, though Toronto’s market may be cooling slightly and buyers are becoming more skittish, the expectation of sustained low interest rates means the construction cranes aren’t going anywhere. [Globe and Mail]