April 12, 2024 | Buying
The Canadian government has recently announced a decision that is expected to benefit first-time homebuyers looking to purchase newly built homes. The government has extended the maximum amortization period on insured mortgages from 25 to 30 years for those whose down payment is less than 20% of the home price. This move is intended to allow young Canadians to have more affordable monthly payments, thus contributing to economic growth and recovery.
Many advocates have praised this decision, calling it a “step in the right direction” and a “game-changer.” The extension of the amortization period is expected to level the playing field for first-time homebuyers, as stated by Mortgage Professionals Canada CEO, Lauren van den Berg. Kevin Lee, CEO of the Canadian Home Builders’ Association, has also supported the decision, stating that it will enable the sector to respond to the government’s goal of building 5.8 million new homes over the next decade. Additionally, the move is expected to offer some relief to the rental market, as it could enable some Canadians to stop renting and become homeowners.
While some experts have raised concerns about the eligibility criteria, many are optimistic about the changes. Ratesdotca mortgage and real estate specialist, Victor Tran, has pointed out that many properties in Vancouver and Toronto are priced at more than $1 million, which typically means buyers have to take uninsured mortgages. Nevertheless, the government’s decision is a positive step towards supporting first-time homebuyers.
As part of the announcement, the government has also raised the amount first-time homebuyers can withdraw from their RRSPs to $60,000 from $35,000 to buy a home. The government has 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. Overall, the decision is expected to have a positive impact on the Canadian housing market, making it more accessible to first-time homebuyers.