On Monday, the federal government announced changes to mortgage rules to help more qualified buyers access mortgages and become homeowners.

The changes, taking effect this year on December 15, include allowing 30-year amortizations for first-time buyers and for newly constructed homes, along with a higher limit on insured mortgages ($1 million to $1.5 million) to reflect current housing prices. As well, homeowners will have the freedom to switch mortgage lenders at renewal without having to take a new stress test.

“We are now making the boldest mortgage reforms in decades to unlock homeownership for younger Canadians,” says The Honourable Chrystia Freeland, deputy prime minister and minister of finance, in a statement. 

“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,” The Honourable Sean Fraser, minister of housing, infrastructure and communities, adds.

Support from the country’s national industry voice

The Canadian Real Estate Association (CREA) says it welcomes the announced reforms, which represent a significant step towards improving access to homeownership and making housing more attainable, something realtors have long advocated for and continue to stand behind.

“This is good news for buyers, particularly first-time buyers and those in more expensive markets such as Toronto and the Greater Toronto Area (GTA), as well as Vancouver and surrounding areas,” says Janice Myers, CREA CEO.

Broad support across the industry

The mortgage reforms will drive more housing construction and supply and reflect recommendations that the Canadian Home Builders’ Association (CHBA) has been calling for. The organization says it’s just what the market needs to help correct the falling trajectory of housing starts and build more homes.

Likewise, the Toronto Regional Real Estate Board (TRREB) says it strongly supports these measures, which will help reduce the monthly cost of mortgage payments and make homeownership a reality for more people across the country, as well as stimulate new housing construction and help address the ongoing housing shortage in our communities.

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., agrees. In a company blog post, she notes, “For many homebuyer hopefuls, the monthly mortgage payment is often the deciding factor between a property that fits in their budget and one that doesn’t. An extra few years to spread out those payments will help many purchasers make the transition from renter to homeowner. Those shopping in Canada’s most expensive markets, where home prices over $1 million are the norm, will also find it a little easier to get into the market.”

Myers shares similar sentiments: “In a recent budget submission, we had advocated for extending 30-year amortization terms to all first-time buyers. We’re pleased our suggestion was adopted to provide more opportunities for homeownership.”

Yolevski expects the implementation of the new rules to likely follow another interest rate cut or two this year. “Lower borrowing costs, combined with these extended mortgage powers, may stir first-time buyer demand in the months ahead, setting the stage for a robust spring market in 2025.”

TRREB: Another call to action

TRREB notes that increasing the insured mortgage price cap in today’s market will allow more people to qualify for an insured mortgage and provide crucial homebuyer support in high-cost areas like the GTA.

It also supports the government’s earlier decision to allow insured mortgage holders to switch lenders at renewal without undergoing a new mortgage stress test and would like this extended to uninsured mortgages, typically those where the homeowner made a larger down payment.

“We have long advocated for these measures, particularly for homeowners to be able to switch lenders at mortgage renewal without a stress test,” notes TRREB CEO, John DiMichele. “Increased competition among lenders is good for homeowners and homeownership, so we reiterate our call for this measure to be extended to mortgage renewals for those who do not require mortgage insurance.”

CMBA: Price cap jump ‘reflects lack of policy change in over 10 years … will finally provide more options’

The Canadian Mortgage Brokers Association — British Columbia (CMBA-BC) and its sister organization, CMBA National, are also in support. For several years, they’ve consistently called for “real changes to address mortgage eligibility policy, (with British Columbians) having felt squeezed out of almost every market in B.C. and across Canada.”

“We are pleased to see the federal government has finally listened to our advice and expanded eligibility of 30-year mortgage amortizations to include all first-time homebuyers as well as buyers of new build homes,” says Rebecca Casey, president of CMBA-BC.

“The announcement of an increase in the price cap for insured mortgages to $1.5 million will also provide additional flexibility for homebuyers as they will not need to make a 20 per cent down payment for an additional $500,000 in purchase price,” adds Casey. “This reflects the lack of a change in this policy in over 10 years and will finally provide more options to homebuyers on how to place a downpayment on their future home.”

‘Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy’

“These types of changes are exactly what CHBA has been calling for, because we simply can’t build homes, be they condominiums, townhomes or whatever housing form makes sense if owners can’t qualify for mortgages,” states Kevin Lee, CEO of CHBA.

Lee explains that 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. He adds, “Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy — it’s exactly these types of policy changes that are needed to create the conditions necessary to move forward.”

TRREB President Jennifer Pearce notes that TRREB members continue to support first-time buyers with the purchase of their homes. “The latest changes to mortgage rules are a step in the right direction and provide affordability and flexibility for homebuyers,” she says. “We look forward to our continued collaboration with CREA and the federal government as we work together to achieve our shared goal of ensuring more Ontarians can access housing and financing options that meet their needs.”

Home Buyers’ Bill of Rights Blueprint

The Canadian government also announced its release of blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights. CREA says it’s aligned with the four guiding principles laid out but will continue to engage with government as discussions evolve.

Myers points out, “The federal government has acknowledged the primary role of provinces and territories in regulating real estate and the desire to work collaboratively to build a national consensus and strengthen housing access and affordability for all Canadians.”

She notes that CREA will continue working with governments and stakeholders to develop solutions across the full housing spectrum.

CHBA response to argument of rules’ inflationary effect on market

CHBA understands that some feel improving access to mortgages will have an inflationary effect on the market, particularly now, but that the extreme under-supply of homes Canada has faced over recent years is a much stronger home price inflation driver.

“If we don’t quickly start building more houses, falling interest rates will create more demand on the limited number of homes available, further driving up prices,” Lee asserts.

“We need to come at the housing shortage from every angle, and adjusting mortgage rules is a big part of that. Canadians who want to buy their first home need a fair opportunity to do so, and young Canadians who were able to buy a starter home, like a condominium, need to be able to get an insured mortgage for their next home, for example, a new townhome.

Today’s changes will help enable them to do so, and will drive more supply of the types of housing Canada needs.”

Like much of the country’s real estate industry, Myers expresses that CREA remains focused on advocating for policies that will help drastically increase housing supply across the continuum so that all Canadians find a home that meets their needs.