Department of Finance
News Release

For immediate release Ottawa, July 9, 2008
2008-051

The Government of Canada today announced adjustments to the rules for government
guaranteed mortgages aimed at protecting and strengthening the Canadian housing
market. The new measures include:

• Fixing the maximum amortization period for new government-backed mortgages to 35 years;
• Requiring a minimum down payment of five per cent for new government-backed mortgages;
• Establishing a consistent minimum credit score requirement; and
• Introducing new loan documentation standards.

Today’s announcement marks a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.
The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after October 15. The Government will work closely with all stakeholders to ensure timely and effective implementation of these measures.

As these measures relate only to new, government-backed insured mortgages, Canadians who already hold mortgages will not be affected by this announcement. The measures announced today will build on the strength of Canada’s housing market. According to the International Monetary Fund, the increase in house prices in Canada is based on sound economic factors such as low interest rates, rising incomes and a growing population. A recent Statistics Canada report concluded that home ownership is at record
levels, with over two-thirds of Canadians owning their own home.

Mortgage arrears—overdue mortgage payments—have also remained low. In recent years, the percentage of mortgages in arrears for three months or more continues to be at low levels not seen since 1990.

A backgrounder on today’s measures is attached.
___________________________________
For further information, media may contact:
Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-786
Jack Aubry
Media Relations
Department of Finance
613-996-8080

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Ottawa – The Government of Canada today announced additional measures to protect the long-term stability of Canada’s housing market. These measures will increase the amount of money available to Canadians for mortgages and make mortgage insurance more transparent, understandable and affordable.

These measures, and the limits recently announced for government guaranteed mortgages, will protect the Canadian housing market from a US-style housing bubble and encourage individuals and families to save through home ownership.

Increased sources of funding: The Government of Canada is taking steps to benefit consumers by increasing the volume of funding for mortgages available to Canadianbanks and other mortgage lenders. As Canada Mortgage and Housing Corporation (CMHC) recently announced, the Canada Mortgage Bond (CMB) program will be expanded to include a CMB with a 10-year maturity to interest new investors who are seeking assets beyond the current five-year term.

The planned CMB program expansion is in addition to the record $12.5 billion CMB issue in June, which funded an estimated 64,000 mortgages and brought the total outstanding amount for the CMB program to roughly $136 billion.

The Government of Canada is also proposing changes to clarify the tax treatment of existing innovative capital structures used by Canadian financial institutions to raise funds. Changes announced today will make Canadian regulations more consistent with rules in other jurisdictions that operate under the guidance of the Basel Committee on Banking Supervision. Further details are contained in the attached backgrounder.

Consumer measures: The Government also intends to introduce two new consumer measures around mortgage insurance. The first measure will enhance disclosure to consumers about the characteristics of mortgage insurance. While lenders are already required to itemize the cost of mortgage insurance as part of their disclosure to borrowers, the new measure will set out additional, mandated disclosures to help
consumers better understand the mortgage insurance transaction.

The second measure will ensure that Canadian consumers are charged no more for an insured mortgage than the true cost of obtaining that mortgage. This new measure will guard against practices alleged to occur in other jurisdictions whereby insurance premiums charged to borrowers could be artificially inflated.
___________________________________
For further information, media may contact:

Chisholm Pothier
Press Secretary
Office of the Minister of Finance
613-996-7861

Jack Aubry
Media Relations
Department of Finance
613-996-8080
www.fin.gc.ca