As Parliamentarians returned to the House of Commons yesterday, the first thing on the agenda was changes to the mortgage policy aimed at making housing easier to afford.
Driving the news: Canadians will no longer need to come up with a 20% down payment to get a mortgage on a home worth more than $1 million, as the government moves to raise the cap on insured mortgages in an effort to boost construction and impress young voters.
- First-time homebuyers will also be eligible for mortgages spanning 30 years, up from a maximum of 25 years, which can slightly increase affordability in the short term.
What they’re saying: Generally, homebuyers should aim to put more than the minimum amount down to help lower interest costs and boost equity in their homes, according to Clay Jarvis, a NerdWallet real estate expert. “This new rule flies in the face of that logic,” he says.
Why it matters: Housing affordability and the cost of living are key issues heading into the next federal election, but a sudden surge in demand can offset affordability gains and benefit existing homeowners. “We’ve seen that movie before,” Jarvis says. “The ending sucks."—SB