OTTAWA –
Finance Minister Chrystia Freeland announced changes to some mortgage rules Monday as part of an effort to make housing more affordable, a critical policy issue that has hurt Prime Minister Justin Trudeau and his Liberal government.
Freeland said the government is raising the ceiling for insured mortgages to $1.5 million from $1 million previously, which would allow more people to buy a home with a minimum down payment that was already required at five percent.
Previously, Canadians who did not pay at least a fifth of the cost of a home as a down payment had to take out mortgage insurance, but the insurance was only available for homes priced at $1 million or less. That limit is now $1.5 million.
In addition, buyers will be able to take out 30-year loans if they are buying a home for the first time or if someone is buying a newly constructed home, Freeland said. Previously, the three-year amortization period was limited to first-time buyers purchasing newly constructed homes.
The measure will “encourage more new housing construction and address the housing shortage,” Freeland said in a statement.
Trudeau’s poll numbers fell to a near-historic low of 30 percent in September, which analysts and economists say is largely because millions of people are struggling with high prices, especially for homes and rents.
In Canada, mortgages are usually for 25 years and the rate resets every three or five years. In the United States, homeowners can use a fixed rate for the entire life of their mortgage for 15 or 30 years.
Canada’s mortgage structure exposes most borrowers to rising interest rates and has fueled a housing affordability crisis exacerbated by a record influx of immigrants.
(Reporting by Promit Mukherjee in Ottawa; Editing by Frank McGurty and Leslie Adler)
