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Government-backed mortage is tightening

July 10, 2008 - You can tell this was coming. When I first heard mortages with 40 year amortizations were being offered, my thoughts were: more people can enter the market thereby increasing demand while ensuring that house prices remain strong or increase. Does the word "housing bubble" sound familiar?

Now the government is retreating from their backed mortage to avoid the subprime mess occuring south of the border. They have moved it to maximum term of 35 years and require a minimum down payment of 5 percent, compared with zero now, and this increases the responsibilities of lenders. The idea is to make sure that the housing market stays strong, while reducing the risk of a U.S.-style housing bubble developing in Canada. But, this is not the end of the 40 amortized mortgages. Lenders may still offer it, but are more likelier to be careful.