On September 16, the federal government announced significant changes to Canada’s mortgage system to improve housing accessibility.
One of the fundamental changes is the increase in the limit for CMHC-insured mortgages from $1 million to $1.5 million. These new rules mean buyers can now qualify for a mortgage with less than a 20% down payment on homes worth up to $1.5 million, making higher-priced properties more accessible.
This measure aims to help buyers in markets where housing costs have skyrocketed, making it nearly impossible for many to qualify for insured mortgages under the previous $1 million cap.
Another major reform is the extension of 30-year amortization periods to all first-time buyers. This expansion builds on the government’s earlier announcement this year, which offered 30-year amortizations exclusively for new builds. It’s important to note that the 30-year amortization for new builds is available to all buyers, not just first-time buyers.
The government claims that this change will ease the financial burden on younger buyers by allowing them to spread payments over a more extended period, thereby reducing monthly costs.
These two changes will come into effect on December 15, 2024.
This announcement follows growing concerns about housing affordability. Deputy Prime Minister and Finance Minister Chrystia Freeland emphasized that these reforms are a proactive step towards making homeownership more accessible to more Canadians and addressing ongoing challenges in the real estate market. This proactive approach should instill confidence in our ability to manage these issues.
“In addition to our efforts to help you finance a down payment, today we are introducing the most ambitious mortgage reforms in decades to make homeownership more attainable for young Canadians,” she said. This commitment should give you hope for a more accessible housing market in the future.
The government plans to introduce regulatory amendments to implement these mortgage reforms, with more details expected in the coming weeks.