The federal government is taking steps to address the housing affordability crisis by raising the cap on insured mortgages to $1.5 million and expanding access to 30-year mortgage amortization periods. These changes are intended to make homeownership more attainable for Canadians, especially in expensive markets where many have been priced out of buying a home.
Finance Minister Chrystia Freeland announced on Monday that the previous cap of $1 million for insured mortgages will be increased to $1.5 million. In addition, homebuyers will now have the option to extend their mortgage to 30 years if they are purchasing a newly built home or buying for the first time. Initially, the 30-year amortization was limited to first-time buyers purchasing new homes, but the updated policy will apply more broadly.
This move addresses a long-standing complaint within the mortgage industry, where buyers in high-priced markets like Toronto and Vancouver struggled to afford homes under the previous cap. With home prices in these cities regularly exceeding $1 million, the increase to $1.5 million ensures that insurance, which is mandatory for home purchases with a down payment of less than 20%, is available to a larger pool of buyers.
Freeland emphasized that these changes are designed to help younger Canadians achieve their goal of homeownership, giving first-time buyers a better opportunity to enter the market. The new policies are also expected to spur increased home construction, potentially easing some of the housing supply challenges.
Both the raised mortgage cap and the expanded amortization periods will come into effect on December 15, providing a pathway for more Canadians to achieve the dream of owning a home.
