Changes to Mortgage rules- rule #1

Minister Jim Flaherty announced three changes to the mortgage insurance rules, which will come into effect on April 19th, 2010.
The good news is that most mortgage consumers will not be significantly impacted by the three latest changes. The intentions of the new rules are to curb speculation housing and encourage homeowners to use their homes as a savings tool, rather than borrowing home equity to pay down loans and credit cards.
Rule #1
Minimum down payment requirements for non-owner-occupied homes will increase to 20% from 5%, and the way that rental income is considered has been scaled back as well. This rule will have the most dramatic impact of all three changes, but only on real estate investors. Being required to put more money down and being able to use less potential rental income for qualifying purposes will displace many new real estate investors (who currently only make up around 4% of all mortgage consumers in Canada).This change is intended to avoid any kind of future housing bubble in Canada by curbing speculation building. The recent economic downturn caused builders to stop building and many new homes sat vacant through the early stages of 2009. When rates started to drop and buyers began to gobble up property that had been on the market for some time, the supply/demand ratio started to lead to higher demand and higher prices.