Mortgage changes provide ‘extra incentive’ to build homes faster: Freeland – National

The Liberal government’s recent efforts to make it easier for young Canadians to buy a home will also help address the housing shortage, Finance Minister Chrystia Freeland argued Tuesday.

The deputy prime minister spoke to reporters about last week’s announcement that Ottawa would make 30-year mortgage payments available to all new homes and first-time homebuyers, as well as proposals to raise the price cap on insured mortgages from the current $1 million to $1.5 million.

These measures are intended to make it easier for Canadians who are outside the housing market to qualify for a mortgage and reduce the size of their monthly payments.

Freeland reiterated Tuesday that the Liberal government is trying to provide additional support to young Canadians and those struggling with unaffordable housing, with borrowing costs and home prices still high.

“It is absolutely essential that the dream of home ownership becomes a reality for young Canadians,” she said.

“We consciously give them an advantage, a head start on the housing market.”

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Freeland says Canada will extend 30-year repayment term and raise insured mortgage ceiling

Freeland was also asked if she had considered whether Ottawa’s latest proposals to add more buyers to the supply would not only lead to higher home prices as competition for homes on the market only intensifies.

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She said the Liberal strategy is “carefully targeted” at first-time homebuyers, pointing to the launch of the first home savings account last year, which was intended to help young Canadians save for a down payment.

Freeland added that the latest measures also target new construction, arguing that the measures will provide an “additional incentive” to buy new homes and encourage builders to add more homes.

The Canadian Home Builders’ Association praised the government’s decision last week, saying developers cannot build new properties if potential buyers cannot get mortgages.

According to some experts who spoke to Global News last week, the new proposals would only have an indirect impact on housing construction, as rising prices encourage investors to pour money into ready-made homes.

The Liberal government has a goal of building 3.9 million additional homes by 2031. Freeland said they have already achieved that goal with a series of policies aimed at encouraging homebuying, announced over the past year as affordable housing becomes increasingly important to Canadians.

Freeland said the Liberal government was “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 to stimulate new construction.

“The biggest challenge facing housing in Canada is supply, supply, supply, and we’re going to address that,” she said.

Freeland indicated that the latest mortgage changes “are not the last you’ll hear from us on housing” with the fall session of parliament now in full swing.

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Freeland clarifies down payment levels for new insured mortgage limit

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 must pay at least five percent of the first $500,000 down and make a 10 percent down payment on the remaining portion, up to an additional $500,000.

Now that the price cap has risen to $1.5 million, Frreeland announced Tuesday that the required 10 percent down payment will simply be used to cover the remaining purchase price, up to $1 million for a home.

For example, if a buyer takes out a secured mortgage on a home worth $1.25 million, he or she must put down a 5 percent down payment on the first $500,000 and a 10 percent down payment on the remaining $750,000, for a total down payment of $100,000.

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