(Corrects currency conversion in second paragraph)
June 21 (Bloomberg) -- Canadian Finance Minister Jim Flaherty said he will tighten mortgage terms as the Group of Seven country with the soundest government finances tries to avert a household debt crisis.
The government will shorten the maximum amortization period on mortgages the government insures to 25 years from 30 years, and lower the maximum amount homeowners can borrow against the value of their homes to 80 percent from 85 percent, Flaherty said in a statement delivered in Ottawa. Canada will also cap mortgage debt payments at 39 percent of income and limit government mortgage insurance to homes worth less than C$1 million ($981,162).
The changes will take effect July 9.
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