Ottawa to expand 30-year amortizations, raise insured mortgage cap

The Liberal government announced on Monday a set of proposed changes to the Canadian mortgage market, aimed at expanding access to 30-year amortizations and raising the cap on insured mortgage products.

First-time homebuyers and those purchasing newly built homes will soon be able to access insured mortgages with a 30-year amortization period, an increase from the current 25-year term.

Additionally, the government is raising the price limit for insured mortgages from $1 million to $1.5 million.

These changes are set to take effect on December 15.

Deputy Prime Minister and Finance Minister Chrystia Freeland made the announcement in Ottawa as Parliament resumed for the fall session in the House of Commons.

Extending amortization periods reduces the monthly mortgage payments, although homeowners will end up paying more in interest over the loan’s lifespan.

Currently, households purchasing homes with uninsured mortgages must provide a down payment exceeding 20 per cent, and the $1 million cap on insured mortgages presents a hurdle for those looking to buy properties valued above that amount.

In some of Canada's most expensive housing markets, where average home prices exceed $1 million, many prospective buyers face difficulties saving enough to purchase a home.

The proposed changes would allow buyers to put down between 5 and 20 per cent of the value of a home priced up to $1.5 million, making it easier to meet the down payment requirements.

This announcement follows a previous policy introduced by the Liberals on August 1, which allowed 30-year amortizations for first-time homebuyers purchasing newly constructed homes with insured mortgages.