Feds Tighten Lending Policy

VANCOUVER - The federal government will no longer guarantee 40-year or zero-down mortgages in an effort to avoid a housing crisis like the sub-prime mortgage meltdown experienced in the United States.

In an announcement released today, the government said government-backed mortgages would require a minimum down payment of five per cent and a maximum amortization period of 35 years.  The borrower would have to have a consistent minimum credit score and there would be new loan documentation standards.

"Today's announcement marks a responsible and measured approach by the Government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada," a release issued by the federal Department of Finance said.