New rules also mean first-time homebuyers can pull $60,000 rather than $35,000 from RRSPs to use in a downpayment on a home
Canada will relax the rules on home lending to allow first-time buyers to take out 30-year mortgages when they purchase newly built homes. The change to the rules for insured mortgages comes into effect on Aug. 1, Finance Minister Chrystia Freeland said. It’s a move that’s primarily aimed at younger people who have been squeezed by soaring housing prices and high-interest rates.
“First-time homebuyers will now have 30 years to pay off their mortgage instead of 25,” Freeland said Thursday in Toronto. “That translates to lower monthly payments so more younger Canadians can afford to pay that monthly mortgage on a new home.
Canada is dealing with a huge shortage of homes to accommodate its rapidly growing population. Housing starts rose in the early part of the COVID-19 pandemic, but construction activity softened when interest rates began to rise. The government’s housing agency has estimated that at the current pace of activity, by 2030 Canada will be millions of homes short of what is needed to create a more affordable market.