In 2006 the CanadaÃ¢â‚¬â„¢s federal government extended the maximum allowable amortization for a mortgage from 25 years to 40 years. This dramatically changed what Canadians could afford to spend on their home. A typical couple went from having a maximum budget of $450,000 with a 25 year mortgage to over $575,000 with a 40 year mortgage. This resulted in a record 97,000 home sales in the GTA in 2007.
Fast forwarding five years, the federal government now appears to be concerned that household debt levels have been on the rise since 2006. It makes one wonder what they thought was going to happen when they extended amortizations from 25 to 40 years back in 2006.
In 2008 the federal government scaled back the maximum amortization for insured mortgages from 40 years to 35 years and today they decided to reduce the limit even further to 30 years.
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