Trudeau government unveils insured mortgage changes

Trudeau government unveils insured mortgage changes | Insurance Business Canada

Property

Trudeau government unveils insured mortgage changes

They’ve been called “the boldest mortgages reforms in decades”

Property

By
Terry Gangcuangco

The Canadian government has introduced new measures to ease the path to homeownership, especially for younger generations struggling with rising housing costs.

Aimed at reducing financial barriers, the reforms include extending the availability of 30-year insured mortgage amortizations for first-time homebuyers and those purchasing new builds.

Deputy Prime Minister and Minister of Finance Chrystia Freeland unveiled a set of changes, including raising the insured mortgage price cap from $1 million to $1.5 million by December 15. The adjustment marks the first increase since 2012, enabling more Canadians to qualify for a mortgage with a downpayment of less than 20%.

In addition, the eligibility for 30-year mortgage amortizations will be expanded on the same date to include all first-time homebuyers and buyers of newly constructed homes, further easing monthly payments. This is part of the government’s effort to address Canada’s housing supply shortage by encouraging more new home construction.

“We have taken bold action to help more Canadians afford a downpayment, including with the Tax-Free First Home Savings Account, through which more than 750,000 Canadians have already started saving,” Freeland said. “Building on our action to help you afford a downpayment, we are now making the boldest mortgages reforms in decades to unlock homeownership for younger Canadians.

“We are increasing the insured mortgage cap to reflect home prices in more expensive cities, allowing homebuyers more time to pay off their mortgage, and helping homeowners switch lenders to find the lowest interest rate at renewal.”

The reforms build on Budget 2024’s introduction of the enhanced Canadian Mortgage Charter, which grants insured mortgage holders the right to switch lenders at renewal without undergoing another mortgage stress test. By increasing competition, the government hopes to drive down borrowing costs for homebuyers.

The latest measures are also part of a larger strategy to build nearly four million new homes, the most extensive housing initiative in Canada’s history.

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