Boldest mortgage reforms in decades come into force

The Voice of Canada News

Canadians work hard to be able to afford a home. However, the high cost of mortgage payments is a barrier to homeownership, especially for Millennials and Gen Z. The prospect of owning a home in Canada needs to be as real for young people today as it was for previous generations. That is why the federal government is taking significant action to make the housing market fairer for every generation.

Chrystia Freeland, Deputy Prime Minister and Minister of Finance, highlighted that the federal government’s bold mortgage reforms are coming into force. By making downpayments and monthly mortgage payments more affordable, the government is unlocking the dream of homeownership for more Canadians.

To lower the cost of downpayments, effective today, December 15, 2024, the federal government has increased the $1 million price cap for insured mortgages to $1.5 million. For example, a minimum downpayment on a $1.4 million home would now be up to $165,000 lower. This is helping more Canadians, especially younger generations, get those first keys of their own.

To lower monthly mortgage payments by hundreds of dollars, the federal government’s reform to make 30-year amortizations available to all first-time home buyers and to all buyers of new builds will also come into force today. This will reduce the cost of monthly mortgage payments so that more Canadians can afford a mortgage as they start their career and work their way up the salary ladder.

These mortgage reforms build on the strengthened Canadian Mortgage Charter¸ announced in Budget 2024, which allows insured mortgage holders to switch lenders at renewal without being subject to another mortgage stress test (also known as the minimum qualifying rate). Unlocking homeownership for every generation is a top government priority. That is why the federal government has the most ambitious housing plan in Canadian history—a plan to build 4 million new homes, while also protecting renters and helping them save for a downpayment. Further action to make housing more affordable for Canadians will be announced tomorrow in the 2024 Fall Economic Statement.

Quotes

“Building on our action to help Canadians save for a downpayment, starting today, Canadians can apply for mortgages with lower downpayments than yesterday, and with payments that are hundreds of dollars less each month for first-time home buyers and all buyers of new builds. We are making the boldest mortgage reforms in decades, because we know we need to do everything we can to help more Canadians afford to buy a home.– Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Quick facts

• The 2024 Fall Economic Statement will be released by the Deputy Prime Minister and Minister of Finance on Monday, December 16, 2024.
• The federal government’s housing plan—the most ambitious in Canadian history—will unlock nearly 4 million more homes to make housing more affordable for Canadians.
• The strengthened Canadian Mortgage Charter, announced in Budget 2024, sets out the expectations of financial institutions to ensure Canadians in mortgage hardship have access to tailored relief and to make it easier to buy a first home.
  • To make it easier for more homeowners to switch lenders when it comes time to renew their mortgage, on November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) removed the mortgage stress test at renewal for uninsured mortgage holders switching from one federally regulated lender to another.
• In addition to recent mortgage reforms, the federal government is:
  • Launching and expanding a new Canada Secondary Suite Loan Program to enable homeowners to access low-interest loans to help with the cost of renovations.
  • Helping one million Canadians save with a Tax-Free First Home Savings Account. Canadians can contribute up to $8,000 per year, and up to a lifetime limit of $40,000, towards their first downpayment. Tax-free in; tax-free out;
  • Allowing Canadians to withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) for their first downpayment. By increasing the Home Buyers’ Plan limit from $35,000 to $60,000 in Budget 2024, first-time home buyers can now access up to $25,000 more for their downpayment to buy or build a home. This can be combined with savings through the Tax-Free First Home Savings Account.
  • Advancing a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights, to protect renters from unfair practices, make leases simpler, and increase price transparency; and help make the process of buying a home, fairer, more open, and more transparent.