”The change will come into effect on Aug. 1, Finance Minister Chrystia Freeland said Thursday. It’s a move that’s primarily aimed at younger voters who have been squeezed by soaring housing prices and high interest rates.
Canada saw housing starts of an annualized 253,468 units in February, the most in five months, according to Canada Mortgage & Housing Corp. But the population grew by about 1.3 million last year.
The slow pace of building has heaped pressure on Justin Trudeau’s government to try to boost development. The prime minister hinted last week that mortgage reforms were coming in Freeland’s April 16 budget.
Canada briefly experimented nearly two decades ago with allowing insured mortgages as long as 40 years, but reversed course when poor mortgage underwriting by U.S. lenders led to cascading defaults that contributed to the global financial crisis in 2008.
The current 25-year limit on amortizations applies to mortgages where default insurance is required. It’s been in place since 2012.
Freeland also pledged that existing homeowners who’ve had to stretch their amortization periods due to financial hardship may be able to keep those longer repayment periods, without fees or penalties.
“Canadians work really hard to be able to buy and afford their homes, and it is only fair that mortgage lenders should help Canadians do everything they can to afford their homes at a time of higher interest rates,” she said.
She also announced that first-time homebuyers will be able to pull more money from their registered retirement savings plans to use in a downpayment on a home. The legal limit is being raised to $60,000 from $35,000.”
Source: to read the original article published on the Financial Post website click HERE
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