Deputy Prime Minister and Finance Minister Chrystia Freeland announced a number of housing affordability measures Thursday that she said will help buyers get their first homes and help current homeowners afford the homes they have. "I really hope and believe the specific measures we announced today are going to provide a lot of comfort and a lot of hope to young Canadians."
Freeland announced that effective April 16, the amount first-time home buyers can withdraw from their RRSPs to make a down payment on their first home will rise from a maximum of $35,000 to $60,000.
People who make such withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years in total rather than two.
Freeland also said the government will change mortgage rules to allow people struggling to pay their monthly home debts to permanently extend their repayment term to 35 years. As of August 1st, first-time homebuyers who purchase newly constructed homes will also get to borrow mortgages for 30-year terms, instead of 25 years.
She also said that depending on a homeowner’s circumstances, the amortization period can be made permanent, even for people with insured mortgages, and making that change will not come with any extra fees or penalties.
The Canadian Home Builders' Association has advocated for longer amortization periods, saying five more years would help with affordability and spur more construction.
This is the first time in more than a decade that Ottawa has eased its mortgage rules, which have increasingly become tougher to protect banks from mortgage defaults and ensure homeowners can handle their debt loads.
Some other changes that were announced in the fall under the Canadian Mortgage Charter required that the banks reach out to homeowners four to six months in advance of their mortgage renewal date to inform them of affordability options.
Freeland said that now lenders will have to contact borrowers up to 24 months in advance of a homeowner’s mortgage renewal to discuss options.
