In an already shaken up Edmonton real estate market, more restrictions will be put into place at the government level. Effective Monday, July 9^th government-insured mortgage rules will change, according to Edmonton Journal. This change will make some potential buyers ineligible.

Here is the breakdown of the new restrictions put in place by federal Finance Minister Jim Flaherty –

The maximum mortgage period will shift from 30 to 25 years and five percent of the maximum size of a home equity line of credit is being taken off. Homes that are worth more than 1 million dollars are now ineligible for government-issued insurance.

Can the market really take anymore? No. The reviews are mixed on whether or not this will have a big influence on the market. These new restrictions put into place seem to target new first time buyers.

Garth Turner, a former minister of national revenue has come out and projected that the markets are going to deteriorate. Also chiming in that chopping off five years is the same as adding one percent interest. This change will knock out potential first time buyers and make manageable payments substantially higher.

This came after a May 3^rd article in the journal making it seem like first time home buyers were in a better position to buy. These restrictions in addition to existing rules put into place seem to make a higher mortgage payment even higher. Potential buyer that intent to put down below 20% of the cost of their home automatically receives mortgage default insurance if the bank they are borrowing from is federally regulated. The cost to the buyer is up to 2.75% of the cost of the home down on a 25 years amortization.

So what does that fee entail? It includes full 100% coverage and backing if they cannot make payments and default on their loan. Rates are actually higher for those that put more money down towards their new home, with a shorter mortgage. What seemed like was supposed to make owning a home easier and obtainable for those who may not necessarily be able to seem to be encouraging them to accept higher payments and risk.