Federal Government Announces Changes to Mortgage Insurance

Hamilton Community Credit Union has just received this News Brief from Central 1

The federal government announced today three changes to the underwriting
criteria for its mortgage insurance. The move is intended to pre-empt potential
problems in the mortgage and housing markets by reducing the availability of
mortgage credit.

The changes to the rules for government-backed insured mortgages:

• Require that a borrower qualify at a five-year fixed mortgage rate even if
  he/she chooses a mortgage with a lower interest rate and shorter term.
  Currently, borrowers qualify at a three-year term;


• Lower the maximum amount homeowners can withdraw in refinancing
  their mortgages to 90% from 95% of the value of their homes; and


• Increase the minimum down payment to 20% from 5% on non-owneroccupied
  properties purchased for speculation.

These adjustments to mortgage insurance come into force on April 19, 2010, with
exceptions allowed after April 19 where necessary to satisfy a binding purchase
and sale, financing, or refinancing agreement entered into before April 19, 2010.
These changes will have a minor negative impact on housing sales activity since
some potential borrowers will not be able to qualify at the five-year rate versus
the three-year rate. The main intent of this change is to limit future mortgagereset
problems when interest rates rise.

The Hamilton Spectator also had this article regarding the changes.

For more information regarding these changes or to obtain clarification on any outstanding questions please contact a Member Service Representative at either of our branches.