Ottawa to ease mortgage rules

Some fear changes for first-time buyers, newly built homes will push prices up

- VICTORIA GIBSON

First-time buyers across Canada and any purchasers of newly built homes will soon be able to stretch their mortgages out an extra five years, the federal government announced Monday along with other changes builders hope will spur more home construction, but that observers fear could push prices up.

The ability to offer 30-year amortizations for insured mortgages was announced by Deputy Prime Minister Chrystia Freeland in Ottawa, along with a reduction in the down payment required for homes between $1 million and $1.5 million.

"It is going to put the dream of home ownership in reach for more young Canadians," Freeland said.

The moves expand on a decision this year to allow 30-year amortizations for first-time buyers purchasing new builds, which took effect Aug. 1.

With the announcement, a firsttime buyer of a resale home who takes out an insured mortgage which happens when a homebuyer provides less than 20 per cent as a down payment - could also be offered a 30-year loan repayment instead of a 25-year term. The same would apply for any buyer, firsttime or not, who buys a newly built home.

The expansion to any new-build buyer was aimed at "creating more demand" for those homes, Freeland said, with hopes that it would lead to increasing supply. Despite a housing shortage in areas like the GTA, higher interest rates and construction costs have collided in recent months and caused developers to struggle in launching new projects or getting existing ones to the finish line.