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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.
He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.
In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.
Global Real Estate Project
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Canada extends amortization period to 35 yearsCanada Mortgage and Housing Corporation (CMHC) introduced several measures aiming to facilitate homeownership among Canadians, including most recent landed immigrants. These changes fall in time while strong economy, relatively strong housing starts, and abundance of financial resources have still to be matched by appropriate and sustainable demand, now eroding under the pressure of rising interest rates. Notwithstanding all positive elements of the new policy, it may have some unintended consequences like making housing more expensive in mid-term, and thus forcing CMHC to extend again and again the amortization periods more in line with the trends in the United States.
Making mortgage loans more accessibleCMHC announced new measures making mortgage loans in Canada more accessible for would-be buyers with moderate incomes. These measures include among the other things offering loan insurance on extended mortgage loan amortization periods up to 35 years, instead of 30-year maximum in force between March and June 2006. The premium surcharges for 30-year and 35-year amortizations will be 0.20% and 0.40% respectively. Other two measures aiming to produce similar effects are elimination of application fees on all high-ratio homeowner mortgage loan insurances, and giving borrowers with proven good credit history a choice to make interest-only payments for up to the first 10 years of their mortgage. This isn't the first time this year when the CMHC eases the requirements in order to facilitate homeownership. In February 2006 in a 4-month pilot project the maximum amortization period was extended from 25 to 30 years. The last decision makes this pilot project ongoing and extends additionally the amortization perid to 35 years.
Expected consequencesThe consequences of this new policy fall into two categories, intended and unintended. Intended consequences are to make some hesitant Canadians go and buy housing despite the rising prices and the rising interest rates. The general mortgage burden throughout the whole amortization period will be even heavier, everything else being equal, but the monthly charges will drop by approximately 15% if 35-year option is chosen.Canada slowly but surely is following again the U.S. example with a substantial time gap. When most American lenders are offering 40-year mortgages, and some have begun experimenting in May 2006 with 50-year amortizations, Canada is slowly moving from 25 to 30-year, and now to 35-year loans. The reasons however are the same on both sides of the border, to offset the rising costs of housing in time when both the lenders and the construction business need more and even growing demand just to keep going. Unintended consequence of this rising demand will be that the real estate market in Canada will go up, thus making the affordability slip again after a brief period of relative mortgage relief. With economic and demographic structure in Canada and the United States being fairly similar, it's perhaps a matter of time before the CMHC begins offering insurance on even more extended 40-year amortizations.
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See also the directory of companies providing real estate services in, and general real estate information of Canada.
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