Finance Minister Jim Flaherty outlined three new rules for the mortgage market to prevent a housing bubble like the one experienced in the United States.  The heads of the major Canadian banks have been pushing the Federal government for action on this issue for some time now, and they have finally responded.

The first new rule to be enforced is for lenders to make sure that any prospective home buyer meets minimum standards for a standard 5 year, fixed rate mortgage, even if it is a lower interest rate or a shorter term.  The argument being that it will protect home buyers from future rising interest rates.

The second new regulation would lower the amount of funds you can borrow against your home when someone refinances, from 95% to 90% of the value of their homes.

Thirdly, the government will require a 20% down payment on properties that are not the primary residence of the individual purchasing the property, but rather a speculation.

Watch the Finance Minsters comments below: