Canadian Finance Minister Jim Flaherty announced steps to tighten record household borrowing amid concern rising debt levels could threaten the economic recovery.
Canada will shorten the maximum amortization period for government-insured mortgages to 30 years from 35 years, and lower the maximum amount homeowners can borrow against the value of their homes to 85 percent from 90 percent, Flaherty said in a statement released today in Ottawa. The changes take effect March 18.
The government will also remove its backing for home-equity lines of credit starting on April 18.
Policymakers including Flaherty and Bank of Canada Governor Mark Carney have been urging households in recent months to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years.
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