Mortgage Research
Mortgage Reforms Announced by the Government of Canada
The Government of Canada has introduced major mortgage reforms to make homeownership more accessible and affordable for Canadians. In this blog, we're talking about what is changing and how this impacts our community.
Changes include:
- Borrowers switching lenders at renewal will not need to complete the Stress Test
- Canada’s banking regulator, OSFI, is poised to ease mortgage rules for homeowners looking to switch lenders during mortgage renewal. Effective November 21, borrowers renewing with a different lender will no longer need to complete the mortgage stress test, simplifying the process for those with uninsured mortgages. In the past, even a straightforward renewal switch required borrowers to demonstrate their ability to manage payments at a rate 2% higher than the new mortgage contract rate. This posed significant challenges as rates climbed to 6%, bringing the stress test rate to 8%. While insured mortgages were already exempt from this requirement, uninsured borrowers will now receive similar treatment.
- Higher Insured-Mortgage Cap
- Starting December 15, 2024, the insured mortgage cap will increase from $1 million to $1.5 million—the first adjustment since 2012! This update better aligns with today’s housing market, allowing more Canadians to qualify for a mortgage with less than a 20% down payment.
- Extended 30-Year Amortization
- Also coming into effect December 15, 2024, first-time homebuyers and new-build purchasers will be eligible for 30-year mortgage amortizations (previously capped at 25 years) on insured mortgages. The longer amortization period will help make home ownership more affordable by lowering monthly mortgage payments. The change should also encourage new home construction to help ease the housing shortage.
These reforms build on earlier initiatives from 2024, including:
- RRSP Home Buyer’s Plan
- The limit was raised from $35,000 to $60,000, offering Canadians more flexibility when using their savings for a home purchase.
- Permanent Amortization Relief
- Homeowners facing rising mortgage payments now have long-term support through this measure.
As more details are announced we will keep you informed, but these updates are designed to create new pathways to homeownership. Whether you're considering a move, or nearing mortgage renewal, now’s the perfect time to explore your options!
If you have any questions or need personalized advice on how these changes impact you, The House Team is here to help. Call our team at (613) 962-1388 or request a free appointment HERE. We are here to make the process as smooth and stress-free as possible.
