Buying unaffordable homes

As Parliamentarians returned to the House of Commons yesterday, the first thing on the agenda was changes to the mortgage policy aimed at making housing easier to afford. 

Driving the news: Canadians will no longer need to come up with a 20% down payment to get a mortgage on a home worth more than $1 million, as the government moves to raise the cap on insured mortgages in an effort to boost construction and impress young voters. 

• First-time homebuyers will also be eligible for mortgages spanning 30 years, up from a maximum of 25 years, which can slightly increase affordability in the short term. 

What they’re saying: Generally, homebuyers should aim to put more than the minimum amount down to help lower interest costs and boost equity in their homes, according to Clay Jarvis, a NerdWallet real estate expert. “This new rule flies in the face of that logic,” he says.

Why it matters: Housing affordability and the cost of living are key issues heading into the next federal election, but a sudden surge in demand can offset affordability gains and benefit existing homeowners. “We’ve seen that movie before,” Jarvis says. “The ending sucks."—SB

Source: The Peak