With the sub-prime mortgage debacle that America just experienced, with the collapse of major banking institutions and bankruptcies of insurance companies, it’s amazing the Alberta mortgage interest rates were unaffected.
Thanks to the Department of Finance’s strong presence in both government and private loans, there has been a certain amount of caution and reserve exercised in the housing department. Even though Canada’s housing demand increased 24% in 2007, according to the Canada Mortgage Housing Corporation (CMHC), there was no major move towards sub-prime or near-prime mortgages.
By sticking to strict mortgage terms, the mortgage interest rates have remained low due to the extremely low percentage of mortgages in arrears compared to other nations.
On October 15, 2008, the CMHC made revisions in the mortgage insurance framework. This made it possible to finance up to 95% of a home’s value when you purchase mortgage insurance. In the past, amortization up to 40 years could still receive government backing. Now, the CMHC has put a cap on any government backed loans at 35 years.
In addition, stricter adherence to higher credit scores (a score of 620) must be met to receive a private or government loan backed by the CMHC. Loan documentation such as stated income and self-employment records must meet higher standards.
As a result, the housing market demand is around 5.4% in 2009, a rise from 4% in 2008. However, Alberta mortgage interest rates remain low. Try going online and finding a fixed or variable rate. You can play around with the terms, too.
For example, an online mortgage calculator offers a rate as low as 2.75% on a variable rate with a credit score of 630 for a mortgage of $200,000 or higher, if you have full-time employment.
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