Earlier this month CMHC announced that 40-year mortgages and 100% financing were no longer an option for Canadian home buyers.  CHMC made this move in order to prevent a financial crisis similar to the one currently affecting the housing market in the United States.
 
American banks were lending up to 120 percent of the actual house value. A change in the market resulted in huge financial losses for the insurance companies, precipitating a unprecedented financial crisis. Mortgage and insurance companies in Canada have consistently been far more conservative in their lending practices, preventing a similar housing crisis happening here.
 
CMHC controls the majority of Canada's Mortgage Insurance market. Though there were signs that some of the private insurers might try to retain the 40-year/100% option, it now looks like both AIG and Genworth will be following CHMC's lead. In a statement issued by Peter Vukanovich, President of Genworth Financial Canada, he said:

"We support The Government of Canada's recently announced adjustments to the rules for government guaranteed mortgages aimed at protecting and strengthening the Canadian housing market, including fixing the maximum amortization period for new government-backed mortgages to 35 years, and requiring a minimum down payment of five per cent for new government-backed mortgages. Our products will comply with these rules beginning October 15, 2008, when the new limits take effect."
 
Who will this affect?  

• First time home buyers
• Self-employed home buyers

 
As of October 15, 2008 home buyers will have to come up with a minimum 5% down, plus closing costs. For example, a home selling for $350,000 would require a $17,500 deposit, plus closing costs of approximately $5000.  
 
In the short term, this will likely lead to a surge in sales to self-employed and first time buyers trying to take advantage of the old rules which will be in effect till October 15, 2008!

 
Globe and Mail:  Globe Investor Article:
Canadian Home Buyers Question Cancellation of 40-Year Mortgages


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