Three new rules for the mortgage industry that will come into effect March 18

On January 17, 2011, Finance Minister Jim Flaherty announced new rules for Canadian mortgages that will "protect the stability of the economy."
Flaherty's announcement comes on the heels of a recent warning from the Bank of Canada that Canadians' domestic debt burden is the highest on record.
The announcement included three new rules for the mortgage industry that will come into effect March 18:
Mortgage amortization periods will be reduced from 35 years to 30 years.
The maximum amount Canadians can borrow to refinance their mortgages will be lowered from 90 per cent to 85 per cent of the value of their homes.
The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.
It is the third time in three years that Flaherty has tightened credit rules while interest rates remain historically low.

The new restrictions are intended to ensure that Canadians don't slip into unmanageable debt, which could throw the economic recovery off the rails.
Flaherty targeted home-equity loans and lines of credit because some Canadians were using the money on consumer goods rather than to build equity into their homes, he said.
"They are used to buy boats and cars and big-screen TVs, and that's not the business mortgage insurance was designed for," he said. "Our measures will help improve the financial situation of households in Canada."
The Bank of Canada had announced earlier that Canadians' domestic debt burdens had hit the highest levels on record. The bank said the ratio of household debt to disposable income has reached 148 per cent -- which is higher than in the United States.
The International Monetary Fund also recently warned that household debt is the number one risk to the Canadian economy. Canadian household debt is now at $1.4 trillion, while mortgage delay payments have increased by 50 per cent.