The Canadian government has just revealed what it says are the “most significant” mortgage reforms the country has seen in decades.
On Monday, the Department of Finance Canada announced it would expand eligibility for 30-year mortgage amortizations to all first-time homebuyers and Canadians who purchase new builds.
It also plans on increasing the $1 million price cap for insured mortgages to $1.5 million.
“Building on our action to help you afford a downpayment, we are now making the boldest mortgage reforms in decades to unlock homeownership for younger Canadians,” Deputy Prime Minister and Minister of Finance Chrystia Freeland said in a statement.
“We are increasing the insured mortgage cap to reflect home prices in more expensive cities, allowing homebuyers more time to pay off their mortgage, and helping homeowners switch lenders to find the lowest interest rate at renewal.”
🧵We’re introducing the boldest mortgage reforms in decades to help more Canadians buy and afford a home.
Here’s what we’re doing:
— Chrystia Freeland (@cafreeland) September 16, 2024
Starting December 15, 2024, first-time homebuyers and those buying new builds will be eligible for a 30-year mortgage loan. This will reduce the cost of monthly payments and hopefully help more Canadians afford housing.
The government says this measure will incentivize more new housing construction to tackle the shortage. It builds on the Liberals’ 2024 Budget commitment, which took effect on August 1, allowing 30-year amortizations for first-time homebuyers buying new builds, including condos.
Ottawa will also raise the price cap for insured mortgages to $1.5 million on December 15. This aims to help more Canadians qualify for a mortgage with a downpayment below 20%.
This cap hasn’t been adjusted since 2012, so the feds hope that the increase will help more Canadians afford a home.
These new measures are in addition to the strengthened Canadian Mortgage Charter, which allows all insured mortgage holders to switch lenders at renewal without being subject to another stress test.
Ottawa says not having to re-qualify when renewing with a different lender increases mortgage competition and enables more Canadians with insured mortgages to switch to the best, cheapest deal.
“Everyone deserves a safe and affordable place to call home, and these mortgage measures will go a long way in helping Canadians looking to buy their first home,” stated Sean Fraser, minister of housing, infrastructure and communities.
These policies are part of the government’s plan to build nearly four million new homes.