Government Announces New Mortgage Rules and Blueprints for Renters’ Bill of Rights & Home Buyers’ Bill of Rights
News Release: September 16, 2024 New Mortgage Rules
The Government of Canada has announced a comprehensive suite of new mortgage rules aimed at making home ownership more affordable for Canadians. These reforms build on the recent changes that came into effect on August 1, 2024, which introduced 30-year insured mortgage amortizations for first-time home buyers purchasing new builds. The government is now taking further steps to enhance affordability and accessibility for Canadians aspiring to own homes.
Key Reforms Announced on September 16, 2024:
- As part of its ongoing commitment to improve housing affordability, the Government of Canada has announced a significant increase in the price cap for insured mortgages. Effective December 15, 2024, the insured mortgage price cap will rise from $1 million to $1.5 million.
This change is designed to reflect the current realities of Canada’s housing market, where home prices have risen substantially over the past decade. The $1 million cap, which has been in place since 2012, no longer aligns with average home prices in many regions. By increasing the insured mortgage cap to $1.5 million, more Canadians will be able to qualify for a mortgage with a down payment below 20%, easing the path to home ownership.
- In a further effort to reduce the financial barriers to home ownership, the Government of Canada has announced an expansion of eligibility for 30-year mortgage amortizations. Effective December 15, 2024, 30-year insured mortgage amortizations will be available to all first-time home buyers and all buyers of new builds, significantly lowering monthly mortgage payments and helping more Canadians afford homes.
This reform builds on the Budget 2024 initiative, which came into effect on August 1, 2024, allowing 30-year amortizations for first-time home buyers purchasing new builds, including condos. The expanded eligibility will now cover:
-
- All first-time home buyers, regardless of whether they are purchasing new or existing homes.
- All buyers of new builds, including condominiums, whether they are first-time buyers or not.
Key Benefits of Expanding 30-Year Amortizations:
-
- Lower Monthly Payments: Extending the amortization period to 30 years will reduce monthly mortgage payments, providing immediate financial relief to buyers.
- Increased Housing Accessibility: By easing the financial burden, more Canadians will be able to afford homes, helping first-time buyers enter the market and supporting existing homeowners looking to purchase newly built properties.
- Boosting New Housing Supply: By incentivizing the purchase of new builds, this measure supports the construction industry and encourages more housing developments, contributing to the government’s efforts to tackle Canada’s housing shortage.
The new mortgage rules announced September 16, 2024 builds upon the strengthened Canadian Mortgage Charter, introduced in Budget 2024. A key feature of this charter, which is already in effect, is the provision that allows all insured mortgage holders to switch lenders at renewal without being subject to a second mortgage stress test.
This pivotal change has been designed to:
- Increase Mortgage Competition: By removing the requirement to requalify under a stress test when renewing with a new lender, homeowners are now empowered to shop around for better mortgage rates, boosting competition among lenders.
- Enable Access to Better Deals: Homeowners with insured mortgages can now seamlessly switch to lenders offering more affordable rates and terms, ensuring they can secure the best, cheapest deal without fear of losing their mortgage due to stress test requalification.
- Enhance Mortgage Flexibility: This change provides homeowners with more flexibility and financial security, knowing they can access better mortgage terms at renewal without being restricted to their current lender.
This policy has already made it easier for Canadians to manage their mortgage costs, and the newly announced measures, such as the expanded 30-year amortizations and increased insured mortgage cap, will further enhance home affordability across the country. Together, these changes represent a comprehensive approach to improving mortgage accessibility and easing financial pressures on Canadian homeowners.
The government’s stated objective is to foster a more competitive mortgage market and help Canadians achieve and maintain home ownership. Further details on all new mortgage rules will be provided as the December 15, 2024 implementation date approaches.