Ottawa to allow 30-year amortization for first-time buyers’ mortgages on new homes + MORE Apr 12th

Advocates are praising Ottawa’s move to lengthen the amortization period on insured mortgages for certain homebuyers.

Some advocates are praising Ottawa’s move to lengthen the amortization period on insured mortgages for certain home buyers, but say expanding the policy to all Canadians would help make home ownership more affordable.

Speaking in Toronto on Thursday, Finance Minister Chrystia Freeland announced the federal government will allow 30-year amortization periods on insured mortgages for first-time home buyers purchasing newly built homes.

The change will take effect Aug. 1.

You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quote*I’m buying a homeI’m renewing/refinancingYou will be leaving MoneySense. Just close the tab to return.

Who can get a 30-year mortgage?

Under the current rules, if a down payment is less than 20% of the home price, the longest allowable amortization—the length of time a home owner has to repay their mortgage—is 25 years.

“Faced with a shortage of housing options and increasingly high rent and home prices, younger Canadians understandably feel like the deck is stacked against them,” Freeland said in a news release…

Those hoping for an interest rate shake-up will need to wait a little longer. The Bank of Canada (BoC) announced on the morning of April 10 that it will continue to keep its overnight lending rate—the benchmark used by consumer lenders when setting their variable mortgage rate pricing—unchanged at 5%. 

Sentiment around the interest rate decision 

The rate hold was largely anticipated by markets and economists. Many hoped it to be the central bank’s last hold before pivoting to a cutting cycle (lowering the rate, finally). Optimism around this has grown following February’s inflation report, in which the Consumer Price Index (CPI) clocked in at 2.8%, which is within one percentage point of the BoC’s 2% target. 

However, the BoC itself seems less enthusiastic about this prospect. 

The tone and language used in the announcement by the BoC’s Governing Council (the team of economists setting the direction for Canadian interest rates) clearly stated that inflation risks remain too high for comfort…