MY PREDICTION - New Mortgage Rules Will Drive Up Housing Prices

Looser lending policies will encourage more people to buy homes they can't afford in the first place

- Andrey Pavlov

In December of 2024, the federal government softened its rules around mortgage lending. The idea behind the new policies is to make housing accessible to more homebuyers-and that's what they'll do, at least on paper.

The biggest changes affect buyers who have made down payments of less than 20 per cent, which require mortgagedefault insurance. The government has lifted the maximum price cap permitted for these mortgages from $1 million to $1.5 million. Another change is that first-time homebuyers with insured mortgages, and anyone buying a newly built home with one, will be able to take up to 30 years to pay off their loans, instead of the previous maximum of 25. That means smaller monthly payments, but it also means buyers will pay more interest over the life of their mortgages.