To help Canadians, particularly first-time buyers, more easily afford a home purchase, the federal government recently announced significant rule changes regarding mortgage qualifications.¹ The following two rules took effect on December 15, 2024:
 

1. 30-year mortgage amortizations available to all first-time homebuyers and new-build buyers. This move will lower the cost of monthly mortgage payments by extending the amortization period beyond the standard 25-year limit and is designed to help Canadians purchase a home while keeping more available cash for everyday expenses and savings.
2. Price cap for insured mortgages is increasing to $1.5 million from $1 million. This cap increase allows more Canadians with a downpayment of less than 20% of the property’s value, to qualify for a mortgage.

 
While both measures might increase the overall cost of home ownership, they also allow unprecedented access for many Canadians, especially first-time homebuyers, and younger generations, to enter the housing market at a time when affordability has declined dramatically.  The changes will also impact investors in preconstruction properties, making mortgages more accessible.

Plus, lower mortgage rates will help make financing more affordable for Canadians and put home ownership within reach. Not only has the Bank of Canada recently cut interest rates three times by 25 basis points, but the U.S. Federal Reserve Board just followed suit with its own rate decrease of 50 basis points – their first cut in this economic cycle. Although the exact path of further cuts is unknown, interest rates may continue falling in the months ahead and well into 2025. This could be the extra motivation first-time homebuyers need to test the housing market.

3. Homeowners will no longer need to do stress test when switching mortgage providers.

The national banking regulator says it will no longer require borrowers with uninsured mortgages to undergo a stress test when switching providers. The regulator formally communicated it as part of it quarterly release November 21, 2024.

Whether you are buying a home or renewing your mortgage, it’s wise to consult with your Alterna Advisor before making a decision. We’re here to help!

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¹ https://www.canada.ca/en/department-finance/news/2024/09/government-announces-boldest-mortgage-reforms-in-decades-to-unlock-homeownership-for-more-canadians.html