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The pushing and pulling of Canada's housing market

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2004 to 2007
During this period the rules governing mortgage insurance were relaxed, making it easier to get a mortgage.
• Consumers were allowed to take more money out of their homes when they refinanced; up to 95 per cent of its value, up from 85 • Zero-down insured mortgages were allowed • Lengths on insured mortgages were extended from 25 years to 40

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After the U.S. subprime crisis takes its toll, Finance Minister Jim Flaherty starts tightening the rules. On July 9, he announces that effective Oct. 15: • the maximum length of insured mortgages is cut to 35 years • the minimum downpayment on insured mortgages is raised to five per cent
But the collapse of Lehman Brothers in September threatens to hammer bank lending and the economy. To keep it going, Flaherty announces the Insured Mortgage Purchase Program on Oct. 10. The program sees the government, via CMHC, buy nearly $70-billion worth of mortgage pools from the banks through 2009 and early 2010, so that they can lend more.


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Flaherty gets back to tightening the rules, saying that while “there’s no clear evidence of a housing bubble,” he wants to be prudent and prevent one.
On Feb. 16, he announces that effective April 19: • cuts the maximum amount that consumers can take out when refinancing their mortgages to 90 per cent of the value of the house • tells banks to ensure that variable rate borrowers could effectively afford a fixed rate • toughen up the rules for obtaining mortgage insurance on speculative investment properties

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Further tightening. On Jan. 17, Flaherty announces that as of March 18: • the maximum length of insured mortgages will be cut to 30 years • consumers will only be able to borrow up to 85 per cent of the value of their homes when refinancing.
And, effective April 18: • the government will no longer back mortgage insurance for home equity lines of credit, which had been skyrocketing.

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The tightening continues. On June 21, Flaherty announces that as of July 9: • Ottawa will no longer back mortgage insurance on homes that cost more than $1-million • the maximum length of insured mortgages is cut to 25 years • consumers can only borrow up to 80 per cent of the value of their home when refinancing

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