Mortgage changes will give ‘extra incentive’ to build homes faster: Freeland

The Liberal government’s latest efforts to make it easier for young Canadians to buy a home will also help fix the housing supply crunch, Finance Minister Chrystia Freeland argued Tuesday.
The deputy prime minister spoke to reporters about last week’s announcement that Ottawa would make 30-year mortgage amortizations available on all new builds and for all first-time buyers, as well as proposals to raise the price cap on insured mortgages to $1.5 million, up from the current $1 million. Both changes are set to come into effect on Dec. 15.
The moves have been positioned as a way to make it easier for Canadians who are boxed out of the ownership market to qualify for a mortgage and to reduce the size of their monthly payments.
Freeland reiterated Tuesday that the Liberal government is trying to give extra support to young Canadians and those struggling with unaffordable housing with borrowing costs and home prices still holding high.
“It is absolutely essential that the dream of homeownership be a reality for young Canadians,” she said.
“We are, quite intentionally, giving them an advantage, giving them a leg up in the property market.”
But Freeland was also asked if she had considered whether Ottawa’s latest proposals to add more buyers to the mix would just end up driving home prices higher as competition intensifies over properties in the market.
She said that the Liberal strategy was “carefully targeted” on first-time buyers, citing last year’s launch of the first home savings account aimed at helping young Canadians save for a downpayment.
Freeland added that the latest measures also focus on new builds, arguing that the moves will add an “extra incentive” to buy new homes and encourage builders to add more housing stock.
The Canadian Home Builders’ Association lauded the government’s move last week, arguing that developers can’t break ground on new properties if prospective buyers can’t qualify for mortgages.
Some experts who spoke to Global News last week said that the only impact on homebuilding from the new proposals would be indirect, as rising prices encourage investors to put money down on pre-builds.
The Liberal government has goals of building 3.9 million additional homes by 2031. Freeland said they’ve been moving towards that with a slew of policies aimed at stimulating homebuying announced over the past year as housing affordability became front of mind for Canadians.
Freeland said that the Liberal government is “building a housing plan step by step by step,” and that measures to increase the flow of buyers into the market were only possible after previous announcements to spur new building.
“The key challenge to housing in Canada is supply, supply, supply, and we’re acting on that,” she said.
Freeland teased that the most recent mortgage changes were “not the last you’ll hear from us on housing” with the fall session of Parliament well underway.
As part of her announcement, Freeland clarified the new downpayment requirements for an insured mortgage.
Currently, buyers taking out a mortgage with insurance backed by the federal government will need to put down a minimum of five per cent up front on the first $500,000 and a 10 per cent downpayment on the remaining portion, up to an additional $500,000.
With the price cap rising to $1.5 million, Frreeland announced Tuesday that the 10 per cent downpayment requirements will simply stretch to cover the remainder of the purchase price, up to $1 million on a home.
For example, if a buyer takes out an insured mortgage on a home valued at $1.25 million, they’ll have to put five per cent down for the first $500,000 and 10 per cent down on the remaining $750,000 for a total downpayment of $100,000.