Maroc - STOREYS.COM - A La Une - 16/Sep 17:50

Feds Introduce Two Substantial New Mortgage Reforms

This morning, Minister of Finance Chrystia Freeland announced two new reforms intended to make homeownership more attainable and affordable for Canadians: raising the price cap for insured mortgages by $500,000 and greatly expanding eligibility for 30 year mortgage amortizations.The reforms build upon the 2023 Canadian Mortgage Charter — legislation meant to encourage tailored support for mortgage owners facing severe financial stress — which, along with interest rate drops, "will make mortgages more affordable and put homeownership back within reach for Canadians," says a media release from the Government of Canada.First up, the Federal Government has increased the $1 million price cap for insured mortgages to $1.5 million, effective on December 15. Currently, mortgage loan insurance is not available for homes purchased for over $1 million, preventing many would-be-homebuyers, specifically first-time buyers and the younger generation, from purchasing a home with a down payment of less than 20%. The previous $1 million cap is a hold-over from 2012, when home prices were significantly lower, explains the release. But now, the average home price in Toronto clocked in at $1,074,425 in August, and in Vancouver, homebuyers enjoy an average price of $1,195,900, meaning that the "average" home is now likely to be north of $1 million in these major cities. With the price cap set to increase to $1.5 million, many more Canadians will now be able to qualify for a mortgage and receive mortgage loan insurance. Accompanying the price cap increase announcement is the expansion of eligibility for 30-year mortgage amortizations to include all first-time homebuyers and all new builds. The expansion followed the August 1 introduction of 30-year mortgage amortizations — an effort that was meant to make monthly mortgage payments more affordable for young, first-time homebuyers, but was criticized by experts for not being adequately far-reaching. At the time, Toronto mortgage broker and commentator Ron Butler told STOREYS that his firm's calculation found the program would only be used by 6% of hi-ratios buyers.Now, "given inflation and interest rates have fallen, the government is expanding access to lower monthly mortgage payments to all first-time homebuyers and to all buyers of new builds," says the release. While these government reforms will directly benefit homebuyers, they will also have positive knock-on effects in the home building segment, as Canadian Home Builders' Association (CBHA) CEO Kevin Lee points out. "CHBA is very pleased to see these moves on the mortgage rules," says Lee. "Better access to mortgages will enable buyers to access the market, driving more housing starts and giving industry a chance to push towards targets to close the supply-demand gap. Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy—it is exactly these types of policy changes that are needed to create the conditions necessary to move forward.”The government is calling the actions "the most significant mortgage reforms in decades" and highlighting the role they will play in helping achieve the Federal Government’s plan to build nearly 4 million new homes, as well as make homeownership a more realistic dream to strive for. “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," says Housing Minister Sean Fraser.