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40-Year Am’s Supporting The Market

Supporting-Canadas-Housing-Market Higher mortgage costs are slowing Canadian housing starts.  If it weren’t for long-term amortization, however, the hit would be much bigger.

RBC economist Derek Holt says, “It’s my belief we would be 10 to 20 per cent below 200,000 housing starts next year if it wasn’t for the impact of these mortgage innovations.” 

Holt estimates that 30% of all new insured mortgages are for 40 years.  60% are for over 25 years.  Until recently, a 25-year amortization was the Canadian standard.

Borrowers beware: The interest on a long-am mortgage will sting if you don’t make extra pre-payments.