Experts warn changes to mortgage rules could drive up home prices
Some mortgage professionals are sounding the alarm over the federal government’s latest mortgage rule changes – and the costs that come with them – for first-time homebuyers.
On Monday, Finance Minister Chrystia Freeland announced a higher cap on insured high-ratio mortgages from $1 million up to $1.5 million.
First-time buyers will also be eligible for 30-year amortization mortgages for any type of home, up from the previous 25-year limit.
“This allows people that are in those areas, that are looking to buy over $1 million, a little bit more leverage,” Mortgage Agent Amanda Lawson told CTV News.
According to the government, the move will make it easier for Canadians wanting to get into home ownership.
Victor Tran, a mortgage and real estate expert with RATESDOTCA, said it might not be that easy.
“This kind of opens up a bigger segment of the market for some home purchasers, but of course, it’s going to come at cost,” he said.
Tran warns the changes could lead to higher insurance premiums and steeper monthly payments on mortgages.
Lawson said lower down payments could make pre-approval too big of a hurdle for buyers with larger mortgages.
“You need to make a lot of money to be able to buy a $1.5 million property with less than 20 per cent down,” she said.
The example below breaks down the mortgage for a $1.5 million home with 10 per cent down, according to RATESDOTCA Group LTD.
Impact on home prices
Tran said there are higher-income individuals “sitting on the sidelines” before getting into the market.
“This new rule will allow them to enter the market earlier,” he explained.
Tran warns more high-income buyers run the risk of driving up home prices and pushing ownership further out of reach for those who don’t make as much.
The new mortgage rules come into effect on Dec. 15.
CTVNews.ca Top Stories
Federal government to further limit number of international students
The federal government will be further limiting the number of international students permitted to enter Canada next year. It's the government's latest immigration-related measure to address Canadians' ongoing housing and affordability concerns.
Search for suspect in Kentucky highway shooting ends with discovery of body believed to be his
Authorities say they believe the body of a man suspected of shooting and wounding five people on a Kentucky interstate highway has been found.
Here's why you should get all your vaccines as soon as possible
With all these shots, some Canadians may have questions about the benefit of each vaccine, whether they should get every shot and how often to get them, and if it's safe to get them all at once or if they should space them out.
Bloc MPs will vote confidence in Liberal government next week: Blanchet
The Conservatives' first shot at toppling the Liberal government is likely doomed to fail, after Bloc Quebecois Leader Yves-François Blanchet told reporters his MPs will vote confidence in the government.
'I'm here for the Porsche': Video shows brazen car theft in Mississauga
Video of a brazen daylight auto theft which shows a suspect running over a victim in a stolen luxury SUV has been released by police west of Toronto.
Exploding electronic devices kill 20, wound 450 in second day of explosions in Lebanon
Lebanon's health ministry said Wednesday that at least 20 people were killed and 450 others wounded by exploding electronic devices in multiple regions of the country. The explosions came a day after an apparent Israeli attack targeting pagers used by Hezbollah killed at least 12 and wounded nearly 3,000.
'It starts off innocent': Manitoba man loses $185,000 to crypto-romance scam
A Manitoba man is warning others after he fell victim to an elaborate online scam over the summer.
Teen faces new charge in Sask. high school arson attack
A 14-year-old student who allegedly set her classmate on fire is facing a new charge.
Quebec woman charged with first-degree murder in death of five-year-old boy
A 29-year-old Quebec woman is facing a first-degree murder charge in the death of a five-year-old boy southwest of Montreal.