The federal government has announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market.

The measures announced today include:

> fixing the maximum amortization period for new government-backed mortgages to 35 years;

> requiring a minimum down payment of 5% for new government-backed mortgages;

> establishing a consistent minimum credit score requirement; and

> introducing new loan documentation standards.

The government says the changes are intended “to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.”

The new limits are planned to take effect October 15, 2008. This would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after October 15.

As these measures relate only to new, government-backed insured mortgages, Canadians who already hold mortgages will not be affected by today’s announcement.

The Canadian Association of Accredited Mortgage Professionals (CAAMP) says it supports today’s government initiative to protect the interest of the Canadian taxpayer by strengthening the financial guarantee.

“CAAMP research shows Canadians have always been conservative with their mortgages, especially when compared with Americans,” says Andrew Moor, AMP, chairman of CAAMP. “Five-year fixed mortgages remain popular and paying down debt is still the goal.”