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OTTAWA — Finance Minister Chrystia Freeland announced Monday Canadians will be able to borrow for longer, while also increasing the maximum value for insured mortgages, potentially giving buyers more money in the housing market.
Freeland announced that starting on Dec. 15, the cap for insured mortgages will rise to $1.5 million from the existing $1 million cap today. This would allow buyers to qualify for larger mortgages without putting 20 per cent down.
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On the same day, the government is also expanding the availability of 30-year mortgages. In the spring budget, the government expanded the eligibility of those long-term mortgages to new buyers who were purchasing new builds.
But now the 30-year availability will apply to both new buyers and people buying new construction homes.
Freeland said the changes she is introducing will put more buying power into the hands of first time home buyers and give them an advantage in the market.
“We also spoke to a lot of economists. We spoke to a lot of housing specialists. We spoke to a lot of people in the financial sector. And really what this is all about is putting the dream of home ownership in reach for younger Canadians, giving first time home buyers a leg up in the housing market,” she said.
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The government has pledged to build four million homes by the end of the decade, but housing starts have not happened at a pace that would reach that target. Freeland said offering these looser mortgage terms is about encouraging builders to get more shovels in the ground.
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“Canada needs to get more homes built faster. In order to get those homes built faster, more people need to be buying them,” she said.
She said the $1 million cap on insured mortgages was set in 2012 and the country’s GDP has risen 65 per cent since then making it a dated measure.
“I think this is really a question of recognizing economic reality,” she said.
More to come …
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