New mortgage rules set to spur market recovery, but impact may be short-lived

New mortgage rules coming into effect in December 2024 aim to support Canada’s housing market recovery, but their long-term impact may be limited due to rising home prices and ongoing affordability challenges. The key changes are:

1. 30-Year Amortizations for First-Time Buyers: This reduces monthly payments and could increase purchasing power by about 9%, but it applies mainly to first-time buyers and insured mortgages, which make up a small portion of the market.
2. Increased Insured Mortgage Limit to $1.5 Million: This helps buyers in high-cost markets like Toronto and Vancouver by lowering down payment requirements, but it may not fully address affordability issues.

Experts warn that while these measures will likely provide a short-term boost, they won’t solve underlying problems like housing supply shortages. Increased demand may drive home prices higher, limiting the rules’ effectiveness.

Two additional changes include:

• Stress Test Exemption for Mortgage Renewals (effective Nov. 21, 2024).
• Increased Refinancing Limits (effective Jan. 15, 2025) for building secondary suites to improve rental supply.

Experts agree that the government must focus on long-term solutions, especially increasing housing supply, to ensure lasting improvements.

Read More!