It looks like alot of lenders will be implementing changes to their conventional mortgages by reducing the maximum amortization to 25 years.This would be the same amortization as High Ratio mortgages.Typically a conventional mortgage gives the borrower more flexibility by being able to extend the amortization to 30 or even 35 years.This can allow you to borrow more and keep your monthly payment lower.
Based on these changes if you are thinking of purchasing (with 20% down) or refinancing (always requires 20% equity) in the near future I would push to do it sooner then later. Just like the change to the qualifying rate increase on high ratio mortgage (being implemented on October 17th ) the shorter amortization on conventional mortgages will reduce a borrower’s overall borrowing power for sure.
With previous changes that happened over the past few years I am sure the market will adjust and we may see some new innovated mortgage products to counter these new changes however over the short term the changes will have an impact.
I will keep you posted on further updates.