Real estate experts say the newly announced mortgage rule changes are likely to spur demand in Canada’s housing market.
On Monday, Bloomberg News reported that Canada’s federal government will make 30-year mortgages accessible to first-time home buyers and purchasers of newly built homes. Ottawa also announced it will increase the $1 million price cap for insured mortgages to $1.5 million, which the government said will help Canadians qualify for a mortgage with a down payment under 20 per cent. The federal government’s newly announced changes will take effect on Dec. 15.
“This is good news for anyone looking to enter the market with less than a 20 per cent down payment,” Victor Tran, RATESDOTCA mortgage and real estate expert, said in a statement to BNNBloomberg.ca Tuesday.
“Combined with increased access to 30-year amortizations for all first-time homebuyers, we’re likely to see an uptick in sales activity and a rise in housing prices when it’s initiated in December.”
Leah Zlatkin, licensed mortgage broker and LowestRates.ca expert, said in a statement to BNNBloomberg.ca Tuesday that homebuyers are likely waiting on the sidelines in anticipation of further rate cuts from the Bank of Canada.
Her comments come following figures released Monday from the Canadian Real Estate Association (CREA), which showed the number of homes sold in August fell 2.1 per cent compared to the previous year.
“However, with the recent news of the government raising the CMHC (Canada Mortgage and Housing Corporation)insured mortgage cap to $1.5 million and expanding access to 30-year amortizations to all first-time buyers, I expect that demand will pick up,” Zlatkin said.
“By expanding access to the 30-year mortgage rule and with the Bank of Canada suggesting that more cuts are coming, Canadian homebuyers should start to feel confident in purchasing a home as the balance is now tipping in their favour.”
However, Tran highlighted that certain details regarding the changes remain unknown.
“We don’t yet know whether there will be a surcharge for an insured mortgage above $1 million with less than 20 per cent down, or whether there will be a new tiered system for down payment amounts,” He said.
Over the coming months, Tran said these details will likely be released, adding that while the changes are expected to “make homes more attainable for some,” qualifying will still be a challenge for many other potential buyers.
With files from Bloomberg News