Canada relaxes some mortgage rules to tackle housing crisis
Finance Minister Chrystia Freeland on Monday announced changes to some mortgage rules as part of an effort to make housing more affordable, a critical political issue that has hurt Prime Minister Justin Trudeau and his Liberal government.
Freeland said the government was increasing the cap on insured mortgages to $1.5 million from $1 million earlier, which would allow more people to buy a house with the minimum down payment already required of 5 per cent.
Previously, Canadians who do not pay at least a fifth of the cost of the house as a down payment need to take out mortgage insurance, but the insurance was available only for homes priced at $1 million or less. That limit is now $1.5 million.
Minister of Finance Chrystia Freeland says increasing the price cap ‘is going to put the dream of home ownership in reach for more young Canadians.’ Freeland also announced the federal government is allowing 30-year mortgage amortizations for all first-time homebuyers and for all buyers of new builds.
In addition, purchasers will be able to take out loans for a 30-year period if they are first-time home buyers or if someone is buying a newly built house, Freeland said. Earlier, the three-decade amortization period was limited to first-time buyers buying newly built houses.
The measures will “incentivize more new housing construction and tackle the housing shortage,” Freeland said in a statement.
- Will these mortgage rule changes make a difference for you? Tell us why or why not in an email to ask@cbc.ca.
Trudeau’s polling numbers have slumped to an almost all-time low of 30 per cent in September, which analysts and economists have said is primarily because millions of people are wrestling with high prices, especially of homes and rents.
In Canada, mortgages are typically for 25 years and the rate resets every three or five years. In the United States, homeowners can enjoy a fixed rate for the entire life of a 15-year or 30-year mortgage.
The structure of Canadian mortgages exposes most borrowers to rising interest rates and has helped fuel a housing affordability crisis.
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