MORTGAGES: Should I be concerned about Ottawa's new mortgage rules?

As of April 19, home-buyers will have to meet tougher standards to get a mortgage. Among the new rules is a requirement that borrowers be able to afford a five-year, fixed-rate mortgage,

even if they plan to stay short and variable. It will also be tougher for speculators to jump into the market as they'll now have to make a 20% down payment on any property they don't live in.

For those of us who simply own a home as principal residence the new rules don't mean much. The real question is whether today's tempting variable-rate mortgages offer a good value. The short answer is, they aren't. After the U.S. Federal Reserve raised its discount rate a quarter point in mid-February, the writing is on the wall: Interest rates are about to rise, so you better lock in to a fixed term quickly, ideally before July.

As I write, you can still lock into a five-year fixed term for 3.65% and a 10-year for 5.2%. Both may seem high compared to variable rates of 1.85%, but if and when rates jump, 3.65% will look mighty fine. By 2014, expect to be back at a normalized five-year mortgage rate of 8%, says Garth Turner, a former MP, noted housing industry skeptic and author of the books Greater Fool and Money Road.

Jonathan Chevreau blogs at wealthyboomer.ca.jchevreau@nationalpost.com"OTTAWA MAY HAVE CHANGED THE RULES, BUT THE GAME ISN'T ANY HARDER"

By Garry Marr

Despite all the noise from the capital about keeping an eye on the red-hot housing market, getting a mortgage -- and leaving yourself mired in debt -- has probably never been easier.

Last year, the average price of a home sold in Canada was about $320,000. So what do you need to buy that average home under the federal government's incoming rules? Just scrape together $16,000. And yes, you can raid your RRSP investments for the money, all in the name of keeping the great economic engine of the housing market going.

Call me a skeptic, but remember this: The federal government first got "tough" on first-time buyers in July 2008, when it raised the minimum down payment to 5%, ending the option of buying a home with no cash down. Not that the change has had all that much of an impact. Most banks promote higher-interest programs that give you 5% of the value of your mortgage as "cash back." Most won't let you use the money for down payments, but the extra cash creates wiggle room.

Even though everybody will now have to qualify for a mortgage based on the five-year fixed rate, the bottom line is you still need very little cash up front to get yourself a pile of debt.

(prepared by Jonathan Chevreau & Garry Marr/Financial Post Magazine)