Canadian Finance Minister Jim Flaherty will tighten mortgage-length rules for the third-time as the Group of Seven country with the soundest government finances tries to avert a household debt crisis, a government official said.
Flaherty will shorten the maximum amortization period on mortgages the government insures to 25 years from 30 years, the person said, speaking on condition they not be identified because the decision hasn’t been made public. The changes were first reported by the Canadian Broadcasting Corp. in a report that was confirmed by the government official.
Flaherty has already reduced the amortization limits twice since 2008, cutting them from 40 years amid concern historically low borrowing costs are fueling a housing bubble and pushing household debt to record highs. The shorter-term mortgages increase monthly payments for home owners, prompting people to take on less debt to finance a house.