The federal government announced yesterday that as of October 15th, 2008, they will no longer be guaranteeing mortgages amortized beyond 35 years, or mortgages with less than 5% down payment. Please read the article below for full details. There are basically three companies currently providing mortgage default insurance in Canada. CMHC, Genworth Financial, and AIG.
This announcement refers to government backed mortgages only, namely CMHC, and will not necessarily affect the other two insurers. This doesn't mean the other two insurers will not follow suit, but it does mean that they are not obligated to. Both Genworth and AIG will be having meetings in the near future to discuss their existing product line and any changes they want to make, if any. There are also some alternative lenders who are self insuring and are currently offering 40 year, 100% financing products, so even if all three mortgage insurers drop these products, they still may be available beyond October 15th, although, at a higher rate.
In the meantime, everything will remain the same and 40 year, 100% financing products will still be available until mid-October.
Today's lowest rate on a five year fixed is 5.45% and the lowest variable rate is 4.15% or 0.60 below prime (although there are teaser rates available as low as 2.51% below prime)