The new mortgage rules in Canada, implemented in 2024, are designed to address the ongoing housing affordability crisis, especially in high-cost markets like Toronto and Vancouver. Two of the most significant changes are the increase in the insured mortgage cap to $1.5 million and the expansion of 30-year amortization periods for more buyers.

Key implications:

1. Higher Insured Mortgage Cap: The cap increase from $1 million to $1.5 million allows buyers to qualify for mortgage insurance with a down payment of less than 20%, which can be particularly helpful in expensive housing markets. However, critics argue that while this change may help some buyers, it still requires a high household income to afford homes in this price range, limiting its broader impact.
2. Extended 30-Year Amortizations: Previously available only to first-time buyers of newly built homes, this option has been expanded to all first-time buyers and new home purchasers. This extension lowers monthly payments, making mortgages more affordable in the short term. However, it also means paying more interest over the life of the loan, which could increase the total cost of homeownership in the long run.
3. Stress Test Reforms: Another change is that insured mortgage holders can now switch lenders at renewal without having to pass another stress test. This increases competition and can help borrowers secure better rates, ultimately reducing costs for some homeowners.

These reforms are part of a broader housing initiative aimed at unlocking nearly 4 million new homes to increase supply and help tackle the housing crisis. However, while these changes may provide some relief, especially for higher-income buyers, many prospective homeowners may still find affordability challenging due to high home prices and long-term interest costs.

In sum, these changes are a step toward making homeownership more accessible but come with trade-offs like higher interest costs and a limited impact on lower-income buyers. The reforms are not a silver bullet but can benefit certain segments of the market​.

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Julia Fedak-Realtor

Re/Max Escarpment Realty

"Changing Lives, One Home At A Time"

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