Canada tightens mortgage lending rules as it tries to head off speculators

Canada tightens mortgage lending rules

TORONTO — Canada is tightening mortgage lending rules as historic low rates are raising fears of a potential housing bubble.

Finance Minister Jim Flaherty said Tuesday there is no compelling evidence of a bubble but says the government is taking proactive measures to prevent one.

To qualify for a government-insured mortgage, borrowers will have to meet the standards for a five-year fixed-rate mortgage — up from the current standard for three years.

Flaherty also says if Canadians want to purchase a property where they will not be living, they will have to come up with a 20 percent down payment.

Prospective homeowners will also be limited to borrowing 90 percent of the value of their home instead of 95 percent to get government insurance.