Canada’s Evolving Mortgage Market (Financial Services Ottawa)

Remember the days when “no-money-down” was used only to entice people to buy a new couch? Brace yourself: these deals are now entering the real estate arena

Advisor.ca, by Mark Brown
October 2006

With the slew of innovations coming to the mortgage market, Canadians are now able to take on more debt then ever before. And while the risks of missing payment on a sofa pale in comparison to missed instalments on a semidetached home, these new mortgage-financing products serve a purpose — for the right person.

The most notable innovations to come to the mortgage market in the past year are the zero-down and interest-only mortgage options. But others are on their way: most notably, a hybrid of a zero-down, interest-only option. And that’s not all. Earlier this year, the Canadian Mortgage and Housing Corporation said it will start insuring mortgages with a 40-year amortization period.

While these sorts of products seem designed to entice people who couldn’t otherwise afford to own a home, they’re not only that. Andrew Moor, president of mortgage brokerage firm Invis, says these new product innovations have a clear place in the market.

They are for the doctor fresh out of medical school who has no capital saved up, or a young couple where one is working and the other is finishing up school, he says. “These are good responsible people who look after their debts but haven’t yet saved [for a downpayment].”

Full text: Canada’s evolving mortgage market