Canada New Mortgage Rules Boosting Accessibility Amid Affordability Concerns
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Canada's new mortgage rules, effective December 15, 2024, raise the price cap for insured mortgages to $1.5 million and allow first-time buyers to access 30-year amortization options for various home types, including preconstruction properties. The goal is to make homeownership more attainable for young Canadians, who are keen to explore these new opportunities. However, the longer amortization periods come with the tradeoff of increased overall interest payments, even though they reduce monthly costs.
While some are optimistic about the new rules, concerns exist that they may drive up home prices, especially in already strong markets like Calgary, Halifax, and Moncton. The influx of potential buyers has sparked fears that this could further limit affordability. However, factors like unsold condo inventories in cities like Toronto, alongside a weaker job market, might temper price increases in certain regions.
The new policies primarily address housing demand rather than supply, potentially boosting preconstruction sales but offering limited relief for broader supply shortages. The rules could also impact the rental market if more renters choose to buy homes. However, steady immigration and ongoing rental demand might balance out any significant changes in the rental landscape. Concerns over inflation are tempered, with analysts predicting a modest impact.
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