Mortgage changes will provide ‘extra incentive’ to build homes faster, Freeland says – National
The Liberal government’s latest efforts to make it easier for young Canadians to buy a home will also help address the housing supply crisis, the Finance Minister said. Chrystia Freeland supported on Tuesday.
The Deputy Prime Minister spoke to journalists about last week’s announcement that Ottawa would make a 30-year promise mortgage amortizations available on all new builds and for all first-time buyers, as well as proposals to increase the price ceiling on insured mortgages to $1.5 million, up from $1 million currently.
The measures were presented as a way to make it easier for Canadians excluded from the housing market to obtain a mortgage and reduce their monthly payments.
Freeland reiterated Tuesday that the Liberal government is trying to provide additional support to young Canadians and those struggling to afford housing as borrowing costs and home prices remain high.
“It is absolutely essential that the dream of home ownership becomes a reality for young Canadians,” she said.
“We intentionally give them an advantage, a head start in the real estate market.”
But Freeland was also asked whether she had considered that Ottawa’s latest proposals to add more buyers to the market might end up driving up home prices as competition for properties on the market intensifies.
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She said the Liberal strategy was “carefully targeted” at first-time buyers, citing the launch last year of the first home ownership savings account to help young Canadians save for a down payment.
Freeland added that the latest measures also focus on new construction, saying the measures will add an “additional incentive” to buy new homes and encourage builders to add more units.
The Canadian Home Builders’ Association welcomed the government’s decision last week, saying developers cannot begin construction on new homes if potential buyers cannot qualify for mortgages.
Some experts who spoke to Global News last week said the only impact on housing construction from the new proposals would be indirect, as higher prices encourage investors to put money into pre-built projects.
The Liberal government has a goal of building 3.9 million more homes by 2031. Freeland said they are moving toward that goal with a series of policies to boost home buying announced over the past year as housing affordability has become a priority for Canadians.
Freeland said the Liberal government is “building a housing plan step by step” and that measures to increase the flow of buyers into the market were only possible after previous announcements aimed at boosting new housing construction.
“The biggest housing challenge in Canada is supply, supply, supply, and we’re addressing that,” she said.
Freeland teased that the latest mortgage changes were “not the last you’ll hear from us on housing” as the fall session of Parliament is well underway.
New Down Payment Requirements for Insured Mortgages
As part of her announcement, Freeland clarified the new down payment requirements for an insured mortgage.
Currently, buyers who take out a mortgage with federally backed insurance will be required to make a minimum down payment of 5% on the first $500,000 and a 10% down payment on the remaining portion, up to an additional $500,000.
While the price cap has been raised to $1.5 million, Freeland announced Tuesday that the 10% down payment requirement will simply extend to cover the remainder of the purchase price, up to $1 million on a home.
For example, if a buyer takes out an insured mortgage on a home valued at $1.25 million, they will need to put down 5% on the first $500,000 and 10% on the remaining $750,000, for a total down payment of $100,000.
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