Are New Rules Around the Corner for Housing Industry?

The housing industry in Canada does not think that any more regulation is needed to keep the real estate market healthy. The Canadian Real Estate Association just released its latest report, and the industry said, in a word, enough.

So far the federal government has tightened mortgage laws several times during the housing boom, including rules to require down payments, reduce the amortization time on loans and lower refinance limits for homeowners already in the market. But there is talk that amortization lengths may be lowered again, this time to 25 years. In 2008, loans were allowed for 40 years. They now stand at 30 years.

Royal LePage’s Phil Soper notes that the more practical option is to let the market sort itself out. Things are on an even keel with sales right on target within the 10 year average. In November, an average sale price for a home was $360,396, an increase of 4.6 percent from the same month in 2010.

But apparently the government is considering revamping the laws again. This means that monthly payments would go up, perhaps putting homes out of reach for potential homebuyers that can afford to buy with a 30 year loan. While worrisome, this change would not be as drastic as increasing the down payment requirement, currently at five percent.