If you already have a house do you even pay attention to the news about the CMHC?

It is a complex issue.  The future has large degrees of uncertainty at this time.  If old patterns assert themselves in terms of prices, the new rules may make it unnecessarily difficult for new homeowners to start building equity.  If we are in a new mode, the new rules may protect potential new homeowners from being bankrupted by rising interest rates and falling prices.

It is howerev entirely possible that the old rules allowed people to get mortgages who should not have been encouraged to take them on because it was not financially sound--no matter whetehewr we are in the model of "constantly" rising prices  and (artificially?)  low interest rates or a much more volatile model of uncertain price trends and unkonwn interest rate cycles.

It is also worth noting that home ownership is not a right.

I agree Gord.  I don't know if the 20% DP is that big of a deal though, I think it's more important that people can afford their monthly payments, especially if they are on a variable rate.

I'm paying attention as I would like to buy a house soon.  I really doubt the changes will affect the market greatly here though, but would love to see it!  I think Toronto and Vancouver might see some deflation.

20% is actually (imo) too high for a down payment.  We got in at the end of teh 5% era and that was the only way we could do it, but to be honest 5% is on the low side.  10% would likely be a good minimum.

Given that realities of the AB economy right now, deflation is a very low possibility.  A most a stagnation of prices might happen--but even taht is unlikely in much of the province.

Gord, 20% is high, especially when the average price for a detached house is almost 400k or more!   10% sounds reasonable to me, even 5% shows that people are capable of saving as long as it isn't a gift or a loan.

Any thoughts on the new changes?

I'm hoping they decrease the market here, but the local realtors don't expect to see a change.  Realistically, I at least expect that prices will stay about the same for the next year with maybe a slight reduction on the price range I have my eye on.  Non-luxury condos are more likely to be affected.

I am happy about the changes for 1M+ homes.  If you're buying a home that expensive, you should have 20%!  I'm not sure about all the rules for people who buy homes as investments, but I don't think the government (and taxpayers) should be backing them.

CMHC rules only apply to mortgages backed by CMHC.  People who bought a home more than 5 years ago have enough equity that they can apply enough for a down payment large enough to qualify for a bank backed loan.  The heloc rule change is marginal.  None of the changes are likely to affect house prices very much.  The ATB probably has the best deals for mortgages.

Jim, I could be wrong, but won't this also encourage the banks that do offer a 30 year amortization to at least increase the interest rate with the mortgage?

Also, I suspect that many first time home buyers tend to purchase towards their max.  So maybe a slight decline?

If you have enough equity in a home, banks can be very generous in interest rates.  We have a 40 year mortgage (just before they were banned by the Feds) with a current variable rate of 2.14% (0.85% below prime) from the ATB.  The interest rates charged by a particular bank depend on that bank's success in securing long term investments by those with money.  For example, the Bank of Montreal spent months securing a pool of capital that allowed the Bank to offer 2.99% fixed rate for 5 years mortgages.  Once that pool was allocated to mortgages, the offer ended.

Mortgages may be calculated on terms such as 25, 30 or more years (Our dream home had a 10 year mortgage as we believed ourselves capable of paying off that mortgage at that rate; then I left teaching for ministry and we sold that home.), but the particular terms are for generally 3 to 5 years.  Even though we have a 40 year mortgage, the terms are negotiable every 5 years.  Exceptionally low interest rates the last 3 years have meant that we are actually paying off our mortgage at a faster rate, probably closer to 30 years as we have already in less than 4 years paid off more than 10% of our original mortgage without making any extra payments.

When the period of an agreement expires, home-owners are free to find any lender they want for their new mortgage, so long-term mortgages do not provide banks with the opportunity to increase rates just because they have the home-owner in some kind of binding contract.

Thanks for the info, Jim!

I've heard some of the lower-posted rate banks are difficult to get a mortgage with, such as ING.  I assume a longer amortization made it a little more difficult to go with these companies, as well as convince some of the other ones to give you their best rate.  Renegotiating when a term is up would be easier I imagine, unless refinancing is involved.

I have some time before I'll be ready to jump into the market, so I guess time will tell!

Some people seem to be profitting well from the changes.  I went to a few show homes for 'research' (some serious, some not so much, did you know you can get granite floors?)

At every show home, the people were really talking about the CMHC changes.  "You have to set something up before July 9!".  It gave me a good laugh anyway.