As the financial industry sits down with Ottawa this week to assess tighter mortgage rules, another lending product could find its way into the spotlight – cash-back mortgages.
Keen to avoid a U.S.-style housing bubble, the federal government recently cracked down on lenders and insurers through a series of reforms. Major changes already announced include a planned withdrawal of government guarantees for mortgage loans where the down payment is less than 5 per cent of the home’s value, and for those with amortizations of more than 35 years.
Yet while lenders are phasing out so-called zero-down mortgages, many are still offering buyers a similar option through the use of cash-back incentives in lieu of a down payment. This practice will be up for discussion this week, said