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Most Banks Move To 30-year Conventional Amortizations

35-year-amortizationsBMO, Scotiabank and TD have all confirmed that, effective March 18, they will restrict both high- and low-ratio mortgages to 30-year maximum amortizations (even though the government’s new rules only require that high-ratio amortizations be limited to 30 years).

CIBC and ING Direct haven’t issued a verdict yet.

As for RBC, it too says, “We have not made a final decision on whether we will offer 35-year amortizations on conventional mortgages.” 

Unofficial sources within RBC have told us they think it may allow 35-year amortizations on conventional mortgages, but that’s unconfirmed. If RBC did, it wouldn’t surprise us. It already has the most liberal qualification rate of the Big 6 on conventional mortgages.

A BMO spokesperson told us, “We support the decision (to lower amortizations) in an effort to reduce consumer debt.” Most other banks are toeing the same line.

When the government last cut high-ratio amortizations from 40 to 35 years in October 2008, banks applied the lower limit to conventional amortizations then as well. So, their conservativeness this time is no surprise.

Very few prime lenders kept 40-year amortizations after October 2008. Merix Financial was one of them. Fortunately, Merix says it will also keep 40-year conventional amortizations after the March 18 changes. That’s fantastic news for responsible consumers who want more payment flexibility. It’s also nice to see a lender that has total confidence in its underwriting.

Once official word is disseminated from CIBC, ING and RBC, we’ll post it here.

Rob McLister, CMT