Heavy news! The federal government announced the relaxation of restrictions on home loans, which will be implemented starting from the end of the year!
According to Reuters, Federal Finance Minister Chrystia Freeland announced on Monday the revision of some mortgage rules aimed at making housing more affordable. The article points out that this critical political issue has already damaged the support of Prime Minister Trudeau and his Liberal government.
Fang Huilan stated that the government is raising the mortgage insurance cap from the previous CAD 1 million to CAD 1.5 million, which will allow more people to purchase homes with a minimum down payment of 5%.
The previous regulation was that Canadians who did not pay a down payment of one-fifth of the cost of the house were required to purchase mortgage insurance, but this insurance only applies to houses sold for CAD 1 million or less. Now the federal government has adjusted this upper limit to 1.5 million Canadian dollars.
In addition, if the homebuyer is buying a house for the first time or is currently purchasing a newly-built house, they will be able to obtain a 30-year loan, "said Fang Huilan.
Previously, the 30-year amortization period was limited to first-time homebuyers who purchased newly constructed houses.
These two proposed policy changes will take effect on December 15th.
Fang Huilan announced the news on Monday in Ottawa, as members of parliament are re convening the autumn session of the House of Commons. She stated in a statement that these measures will "incentivize more new housing construction and address housing shortages".
Image source: globalnews
According to Global News, she positions these reforms as helping Canadians afford their first home.
Extending the amortization period can help alleviate the burden of monthly mortgage loans, although homeowners may pay more interest during the loan period. Due to the requirement for families to make a down payment of at least 20% when purchasing an uninsured mortgage, the current price cap for insured mortgages poses a significant barrier for Canadians who wish to purchase properties worth over CAD 1 million.
In some of Canada's most expensive housing markets, the average house price has already exceeded this standard, making it difficult for some potential buyers to save enough money to buy a house.
The Reuters article also pointed out that Trudeau's opinion poll data fell to a historic low in September, with a support rate of only 30%. Analysts and economists say that this is mainly because millions of people are struggling with high housing prices, especially housing prices and rents.
The article states that in Canada, mortgage loan terms are typically 25 years, and interest rates reset every three to five years. In the United States, homeowners can enjoy a fixed interest rate for a mortgage term of 15 or 30 years.
The structure of Canadian mortgage loans puts most borrowers at risk of rising interest rates and exacerbates the housing affordability crisis, which is exacerbated by a record influx of immigrants.
Source link:
https://www.ctvnews.ca/politics/canada-relaxes-some-mortgage-rules-to-tackle-housing-crisis-1.7039500
https://globalnews.ca/news/10757723/ottawa-to-expand-30-year-amortizations-raise-insured-mortgage-cap/