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Mortgage credit, refinancing tightens following government action, says CMHC

Mortgage credit, refinancing tightens following government action, says CMHC

OTTAWA - The Canadian Mortgage and Housing Corp. says fresh data suggest Canadians are taking on less mortgage debt after the government's recent actions to tighten credit.

The CMHC says in its third-quarter report that its homeowner purchase mortgage insurance fell by about 10 per cent, although by the end of September, activity returned to previous levels.

Homeowner refinance activity initially fell by 40 per cent and was still 25 per cent less at the end of September than before the changes.

In March, the government reduced the maximum amortization period for new government-backed insurance mortgages from 35 years to 30.

As well, Ottawa cut the amount Canadians can borrow in refinancing mortgages from 90 per cent to 85 per cent of the value of a home.

Officials with the CMHC said the average outstanding loan on their books was $159,740 at the end of the third quarter, slightly above the previous year.

But the average equity of homeowners in their homes was 45 per cent, compared to 44 per cent for the same period last year.

The CMHC says only 0.42 per cent of CMHC mortgages were in arrears during the period, a rate in line with the industry trend.


SOURCE:By The Canadian Press