Minister of Finance, Jim Flaherty announced this week changes to mortgage lending.

Borrowers taking out an insured mortgage will soon be required to meet the standards for a five-year fixed rate mortgage, regardless of whether they are taking a mortgage with a lower rate. This simply means that buyers will qualify for a lower amount than they would qualify for with the banks current three-year fixed rate benchmark. The rate for a five-year fixed is often at least one point higher than a three-year fixed rate, which will have a noticeable, while not drastic effect on the amount borrowers will qualify to.

Another change taking effect on April 19, 2010 will be the maximum amount of equity that Canadians are able to access when refinancing their homes, will be lowered from 95 per cent to 90 per cent.

Lastly, those buyers purchasing property for investment or non-owner-occupied homes will be required to put a minimum of 20 per cent down payment.

These changes have been put in place as a measure to keep to responsible lending practices in Canada and to keep Canadian borrowers from taking on too much debt with rates said to be on the rise in the near future. The effect of these changes on most borrowers will be minimal. The greatest effect will be on cash strapped purchasers and investors taking out high ratio mortgages.

With these changes taking effect April 19th, buyers do have some time to still purchase under the current guidelines.