The sky isn't falling

Brandon Scott is a Sherwood Park based mortgage consultant and the author of a weekly column entitled Real Estate Solutions in the Sherwood Park News. This article was originally published on July 27, 2012 It has been one month since the Harper government announced the various changes to insured mortgages and nearly three weeks since those changes took effect back on July 9. If you missed hearing the announcement despite all the media coverage, here is a quick recap of the changes that were introduced. The maximum amortization was lowered from 30 years to 25 years, and the maximum purchase price must be less than $1 million. In addition, homeowners can only access or refinance up to 80 per cent of the home’s value, down from 85 per cent, and lastly the gross debt service ratio (GDS) is now capped at 39 per cent and the total debt service (TDS) ratio at 44 per cent. Leading up to the implementation of these new regulations, there certainly was a lot of activity as everyone rushed to ensure their application made it in ahead of the deadline date. There was also a lot of negative talk about the impact this would have on our economy, with most of it coming from an attitude resembling Chicken Little. You recall the ole folk tale, right? A chicken has an acorn fall on his head and believes the worst: the world is coming to an end. He goes around telling everyone he meets of the news and they too join in the chicken’s quest to proclaim the end is near. No one said the new mortgage rule changes were going to put an end to the real estate market entirely, but that sure was the implied persona from some sources. There were people not happy with the policy changes and they made sure their voice was heard. The good news is business hasn’t slowed down and the amount of applications I have seen impacted by the now enforced policy have been very minimal. The sky isn’t falling. I understand most people don’t do well with change, but having seen first-hand the results of easy money in the U.S., embrace the changes that were made by our government to ensure our economy continues to be strong and healthy. Download the current e-edition of the Sherwood Park News