Quick Hits: Liberals Announce 30-Year Terms and $1.5 Million Limit
New Home Buyer Reforms: Economic Impact
On Monday September 16th, the Liberal government announced proposed reforms to the Canadian mortgage market aimed at making homeownership more accessible. Key changes include extending the amortization period for insured mortgages to 30 years (up from 25) and raising the cap on insured mortgage amounts to $1.5 million from $1 million.
These reforms, effective December 15, will allow first-time homebuyers and those purchasing newly constructed homes to benefit from the longer amortization and higher cap, thus reducing their down payment burden. Deputy Prime Minister Chrystia Freeland framed these changes as essential for helping young Canadians achieve homeownership.
What are the implications of the reforms to mortgage market?
The Federal Government’s proposed reforms aim to stimulate the housing market and boost prices, which could benefit the Canadian economy. While framed as improving affordability for first-time buyers, this mainly benefits a select few who can enter the market early. Over time, market dynamics will likely adjust, causing future first-time buyers to face increased prices and debt.
In areas like Greater Vancouver and Greater Toronto, these changes are particularly needed, as many young professionals struggle to save a 20% down payment while managing student debt. However, there’s a risk that these policies could inflate prices in the $1 million to $1.5 million range, leading to higher costs across the housing market as new demand emerges from more buyers with lower down payment options.
Given we are likely going to see another Interest Rate Decrease on October 23rd;
Are we in for a White Hot Winter Real Estate Market? We currently have 14 months of inventory since I last checked
Get in Touch with me at Matt@huronmortgages.ca or www.huronmortgage.com/contact
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Mathew Monks, Mortgage Agent Level 2
Licence #M18002043
Mortgage Intelligence FSRA
Licence #10428
