Canada to allow 30-year amortization for first-time buyers' mortgages on new homes
Some advocates are praising Ottawa's move to lengthen the amortization period on insured mortgages for certain homebuyers, but say expanding the policy to all Canadians would help make home ownership more affordable.
Speaking in Toronto on Thursday, Finance Minister Chrystia Freeland announced the federal government will allow 30-year amortization periods on insured mortgages for first-time homebuyers purchasing newly built homes.
The change will take effect Aug. 1.
Under the current rules, if a down payment is less than 20 per cent of the home price, the longest allowable amortization -- the length of time a homeowner has to repay their mortgage -- is 25 years.
"Faced with a shortage of housing options and increasingly high rent and home prices, younger Canadians understandably feel like the deck is stacked against them," Freeland said in a news release.
"By extending amortization, monthly mortgage payments will be more affordable for young Canadians who want that first home of their own."
Mortgage Professionals Canada CEO Lauren van den Berg called it a "step in the right direction" and said extending the amortization period "will help level the playing field for first-time homebuyers."
"We know that this is going to allow greater opportunities for home ownership and will ultimately contribute to economic revival and economic recovery," she said in an interview.
"But more still needs to be done for all Canadians to have that dream of home ownership within sight."
Van den Berg said the government should expand the option to all Canadians purchasing a home, regardless of whether it is a new build or a pre-existing home.
"There are a lot of areas, particularly in the Greater Vancouver area and in the Greater Toronto Area, where you have no choice but to build up, so the possibility for new builds are not the same across the country."
Ratesdotca mortgage and real estate specialist Victor Tran also raised concerns about how effective the change would be based on the eligibility criteria.
"While it's currently possible to get an insured mortgage with a new build, it's rare," he said in a statement.
Tran also pointed out many properties in Vancouver and Toronto are priced at more than $1 million, which typically means buyers have to take uninsured mortgages.
But Canadian Home Builders' Association CEO Kevin Lee said the announcement would be a "game changer." The group has also been in favour of longer amortization periods, saying five more years would help with affordability and spur more construction.
"This measure will also go a long way to enable our sector to respond to the government's goal of getting 5.8 million new homes built over the next decade," he said in a statement.
"This measure is needed now to help turn the market around, and will be needed for many years to come if we are to work towards doubling housing starts."
He said the rental market should see some relief too, as the move could enable some Canadians to stop renting and become homeowners.
As part of the announcement, Freeland also said the government will raise the amount first-time homebuyers can withdraw from their RRSPs -- to $60,000 from $35,000 -- to buy a home. That will take effect April 16, the day the federal budget is set to be released.
The government said the change reflects the reality that the size of a down payment and the amount of time needed to save up for one are much larger than they used to be.
People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment -- up to five years in total rather than two.
Ottawa said those changes are meant to work in tandem with the First Home Savings Account, which it launched last year. The rules governing that program allow prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 deposit cap and a lifetime contribution limit of $40,000.
Freeland said more than 750,000 Canadians have opened an FHSA to date. While the program came online April 1 of last year, most Canadian financial institutions only began offering the account as of last summer or fall.
Ottawa also announced changes to the Canadian Mortgage Charter that will include an expectation that financial institutions offer permanent amortization relief to protect existing homeowners who meet certain eligibility criteria.
That would allow eligible homeowners to reduce their monthly mortgage payment to a number they can afford for as long as needed.
This report by The Canadian Press was first published April 11, 2024
IN DEPTH
Jagmeet Singh pulls NDP out of deal with Trudeau Liberals, takes aim at Poilievre Conservatives
NDP Leader Jagmeet Singh has pulled his party out of the supply-and-confidence agreement that had been helping keep Prime Minister Justin Trudeau's minority Liberals in power.
'Not the result we wanted': Trudeau responds after surprise Conservative byelection win in Liberal stronghold
Conservative candidate Don Stewart winning the closely-watched Toronto-St. Paul's federal byelection, and delivering a stunning upset to Justin Trudeau's candidate Leslie Church in the long-time Liberal riding, has sent political shockwaves through both parties.
'We will go with the majority': Liberals slammed by opposition over proposal to delay next election
The federal Liberal government learned Friday it might have to retreat on a proposal within its electoral reform legislation to delay the next vote by one week, after all opposition parties came out to say they can't support it.
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca ÐÇ¿Õ´«Ã½
BREAKING Israeli military says it has carried out a 'targeted strike' in Beirut
The Israeli military said it carried out a 'targeted strike' in the Lebanese capital Beirut on Friday.
Since she was a young girl growing up in Vancouver, Ginny Lam says her mom Yat Hei Law made it very clear she favoured her son William, because he was her male heir.
The province's public security minister said he was "shocked" Thursday amid reports that a body believed to be that of a 14-year-old boy was found this week near a Hells Angels hideout near Quebec City.
An Ontario man says it is 'unfair' to pay a $1,500 insurance surcharge because his four-year-old SUV is at a higher risk of being stolen.
Cognitive decline reduced by MIND diet, especially for women and Black people, study finds
Following the MIND diet for 10 years produced a small but significant decrease in the risk of developing thinking, concentration and memory problems, a new study found.
The Montreal couple from Mexico and their three children facing deportation have received a temporary residence permit.
20-year-old, co-conspirator charged in $230M cryptocurrency theft following FBI raid of Miami mansion
A 20-year-old man and his co-conspirator have been charged with conspiracy to steal and launder over US$230 million in cryptocurrency, and federal authorities said the arrests are connected to an FBI raid of a mansion in Miami.
Federal firearm buyback program has cost $67M, still not collecting guns after 4 years
The federal firearm buyback program has cost taxpayers nearly $67.2 million since it was announced in 2020, but it still hasn't collected a single gun.
Lawyers say former Harrods boss Al Fayed was a 'monster' who abused women and girls
Lawyers representing dozens of women who say they were raped and sexually abused by Mohamed Al Fayed, the former boss of the famous London department store Harrods, said the case was akin to the crimes of sex offenders Jimmy Savile, Jeffrey Epstein and Harvey Weinstein.
Local Spotlight
They say a dog is a man’s best friend. In the case of Darren Cropper, from Bonfield, Ont., his three-year-old Siberian husky and golden retriever mix named Bear literally saved his life.
A growing group of brides and wedding photographers from across the province say they have been taken for tens of thousands of dollars by a Barrie, Ont. wedding photographer.
Paleontologists from the Royal B.C. Museum have uncovered "a trove of extraordinary fossils" high in the mountains of northern B.C., the museum announced Thursday.
The search for a missing ancient 28-year-old chocolate donkey ended with a tragic discovery Wednesday.
The Royal Canadian Mounted Police is celebrating an important milestone in the organization's history: 50 years since the first women joined the force.
It's been a whirlwind of joyful events for a northern Ontario couple who just welcomed a baby into their family and won the $70 million Lotto Max jackpot last month.
A Good Samaritan in New Brunswick has replaced a man's stolen bottle cart so he can continue to collect cans and bottles in his Moncton neighbourhood.
David Krumholtz, known for roles like Bernard the Elf in The Santa Clause and physicist Isidor Rabi in Oppenheimer, has spent the latter part of his summer filming horror flick Altar in Winnipeg. He says Winnipeg is the most movie-savvy town he's ever been in.
Edmontonians can count themselves lucky to ever see one tiger salamander, let alone the thousands one local woman says recently descended on her childhood home.