OTTAWA – Finance Minister Chrystia Freeland has announced changes to mortgage rules she says are aimed at helping more Canadians to purchase their first home.
“It is going to put the dream of home ownership in reach for more young Canadians,” Freeland told reporters Monday, announcing changes she said will come into force in December.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
“That is going to have a real impact for thousands, even millions of Canadians,” Freeland said.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home. Freeland said this change better reflects the housing market while “giving first-time homebuyers a leg-up.”
She pushed back on suggestions that the measures will only further inflate housing prices. She said boosting the price cap for insured mortgages reflects how Canada’s gross domestic product has grown over years.
“It needs to keep up with the increase in the size of the Canadian economy,” Freeland said. “That’s just a recognition of economic reality.”
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised in its budget five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
Ottawa also wants to boost transparency by making sales price history available on title searches, and protect potential buyers from blind-bidding.
“What we find is important is ensuring that there’s a level playing field when you’re trying to rent a place to live, or to actually get to the stage of buying a home,” Virani said.
The government is touting the measures it announced Monday as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
Freeland says she plans to table a Fall Economic Statement but would not say when. Such a move may lead to a confidence vote in the Commons, following the NDP ending a formal agreement to prop up the minority Liberal government in such votes.
She also said the government is “absolutely not” considering a home-equity tax on primary residences above a certain value, when asked about government engagement with a group that promotes such a policy.
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