Canada’s Bold New Mortgage Policies: What They Mean for Future Homeowners
"Building on our action to help you afford a down payment, we are now making the boldest mortgage reforms in decades to unlock homeownership for younger Canadians."
— Chrystia Freeland, Deputy Prime Minister and Minister of Finance
On September 16, 2024, the Department of Finance Canada introduced pivotal changes to the housing market, set to take effect on December 15, 2024. These updates, designed to make homeownership more accessible, include raising the insured mortgage price cap from $1 million to $1.5 million and extending 30-year mortgage amortizations to all first-time homebuyers and buyers of new builds. This action builds on the 2024 Canadian Mortgage Charter, first introduced in the 2024 budget which also now enables insured mortgage holders to switch lenders at renewal without a new stress test. These changes are part of the government’s ongoing commitment to making housing more accessible for all Canadians.
While these measures have been widely praised by housing experts as "a bold move in the right direction," some wonder if they will have the impact that many Canadians are hoping for.
Why These New Policies? Why Now?
“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.”
— Sean Fraser, Minister of Housing, Infrastructure and Communities
The federal government has committed to the most ambitious housing plan in Canadian history, focusing on both affordability and the construction of 4 million new homes. In recent years, high housing costs have placed homeownership out of reach for many young Canadians, particularly Millennials and Gen Z. Recognizing this reality, the government is introducing reforms designed to make homeownership a viable goal for these generations.
With decreasing interest rates on the horizon and new mortgage reforms set to take effect, the goal is to make home loans more accessible and affordable. By collaborating with provincial and territorial governments, the federal government is also taking steps to protect renters and buyers, ensuring a fairer, more transparent housing market. Together, these measures are a step toward making homeownership attainable for a new generation.
How Will These New Policies Help Canadians?
1. New Insured Mortgage Price Cap of $1.5 Million
Expanded Eligibility: More Canadians can access insured mortgages with lower interest rates and reduced down payments, a change that’s especially helpful for first-time homebuyers and those in high-cost areas.
Increased Affordability: Raising the price cap makes homeownership more affordable by reducing monthly mortgage payments for some buyers.
Stimulating the Housing Market: This shift could increase demand for homes, leading to new construction and job growth in the housing sector.
2. 30-Year Mortgage Option for First-Time Buyers and New Builds
Lower Monthly Payments: Spreading payments over 30 years lowers monthly installments, easing entry for buyers on tight budgets.
Increased Buying Power: Lower monthly payments also allow buyers to afford larger mortgages, which may give them access to better or larger homes.
Market Boost: Increased demand could stimulate growth in both the new and existing home markets, encouraging developers to meet the rising need for housing.
Greater Flexibility: A 30-year mortgage option provides flexibility, giving buyers more choice in how they finance their homes.
A Step in the Right Direction?
“We have taken bold action to help more Canadians afford a down payment, including with the Tax-Free First Home Savings Account, through which more than 750,000 Canadians have already started saving.”
— Chrystia Freeland, Deputy Prime Minister and Minister of Finance
Canada’s housing affordability crisis has long been a pressing issue, but the government’s focus on actionable policies, including the Canadian Mortgage Charter, is promising for aspiring homeowners. While the challenge of purchasing in cities like Toronto and Vancouver remains steep, these policy shifts provide renewed hope to those previously priced out of the market.
The government’s approach also includes a stronger housing framework through its Renters' and Home Buyers' Bill of Rights. These blueprints for fair leases, greater transparency, and additional support under the $5 billion Canada Housing Infrastructure Fund aim to create a fairer market for both renters and buyers. Only time will tell if these reforms live up to their promise, but for many Canadians, this marks a significant step toward a more accessible and balanced housing landscape.
Disclaimer: The information provided in this blog post is for general informational purposes only and should not be construed as professional advice. REXIG Realty Investment Group does not guarantee the accuracy, completeness, or timeliness of the content. Readers are encouraged to seek professional advice tailored to their specific situation before making any real estate or investment decisions. REXIG Realty Investment Group is not responsible for any actions taken based on the information provided.