Ottawa's mortgage shakeup a bonanza for homeowners and lenders

financialpost.com:

In all my years of covering the mortgage scene, I can’t recall a month so jam-packed with mortgage rule easing.

Last week, the feds declared that starting Dec. 15, they’re boosting the property value limit for default insurance to $1,499,999.99, increasing the maximum amortization for all insured first-time buyers to 30 years and lifting the maximum amortization for all insured buyers of new construction to 30 years.

Borrowers got yet another round of mortgage relief yesterday when The Office of the Superintendent of Financial Institutions announced it was eliminating the federal stress test for uninsured mortgage switches. That change is expected on Nov. 21.

For borrowers who need extra flexibility when applying for a mortgage, these developments give them many more options. They’re also a bonanza for the lending business itself.

Here are six more things to know about this mortgage policy windfall.

When the government announced its new policy, it forgot to clarify what the minimum down payment would be for default-insured purchases over $1 million. Oops. It finally confirmed this week that the down payment requirement is five per cent of the first $500,000 and 10 per cent of the balance. That’s just $125,000 (8.33 per cent) on a $1.5 million purchase, far less than the $300,000 currently required. Moreover, it’s rumoured that default insurance premiums on homes over $1 million may stay the same at 4.2 per cent, assuming a 30-year amortization and minimum down payment. That’s a premium of up to $57,750 plus provincial tax, if applicable, on a $1.5 million property. While pricey, this cost is offset by the 50-plus basis point rate savings that insured borrowers get, and from the ability to get in the market quicker and