Canada’s New Mortgage Rules: What You Need to Know Before December 15!

Big changes are coming to the Canadian housing market, and if you’re looking to buy a home, you need to be prepared. On December 15, 2024, new mortgage rules will take effect, opening up new opportunities for buyers—but with some potential long-term effects you should consider. Here’s a breakdown of what these changes mean for you, especially if you’re in the market for homes for sale.

The Key Mortgage Rule Changes
The Canadian government recently announced two major changes to mortgage rules. The first is the increase in the insured mortgage cap from $1 million to $1.5 million. This change is especially significant for buyers who have less than 20% for a down payment, as it broadens the range of homes they can afford to purchase under an insured mortgage.

For buyers looking at homes for sale in cities like Toronto, where home prices often exceed the previous cap, this new rule could make a real difference. It allows buyers to access higher-priced homes with a lower down payment, giving them more flexibility in what they can afford.

The Return of 30-Year Mortgage Amortizations
The second big change is the extension of 30-year mortgage amortizations to more than just first-time buyers. Starting December 15, if you're purchasing a newly built home, you can stretch your mortgage payments over 30 years, lowering your monthly payments. This could also increase your buying power, allowing you to consider more expensive homes for sale without increasing your monthly costs significantly.

However, there’s a potential downside to consider. Some experts believe that these changes might drive up home prices in the long run. While lower monthly payments make buying more accessible now, an increase in demand could push prices higher, which could hurt affordability in the future.

Will These Changes Help or Hurt the Market?
Housing experts are divided on whether these mortgage changes will have a positive impact. Some argue that the increased insured mortgage cap and longer amortization periods will boost home construction and help buyers afford more properties, easing the pressure on the housing market. On the other hand, realtors like John Pasalis warn that these changes could be a “quick fix” that doesn’t address the root cause of Canada’s housing crisis—a lack of supply.

The truth is, Canada’s housing shortage won’t be solved overnight, and policy changes like these, while helpful to some buyers, might not create long-term affordability. To make a real difference, more homes need to be built to meet the demand.

What Should You Do?
If you're in the market for homes for sale, now is the time to start planning. With the new mortgage rules coming into effect on December 15, this could be the opportunity you’ve been waiting for to buy a home with lower down payment requirements and more manageable monthly payments. But don’t wait too long—if these changes lead to higher home prices, waiting could cost you more in the future.

The new mortgage rules coming in December could give buyers more options, but they may also contribute to rising home prices in the long term. Whether these changes help or hurt the market will depend on how they’re implemented and how buyers and sellers respond. If you’re thinking of buying a home under these new rules, now is the time to act.