Cuts, Reforms, and Opportunities
Here’s everything you need to know about these big changes:
1. Interest Rate Cuts: A Boon for Buyers
The Bank of Canada just announced a significant interest rate cut—dropping by 50 basis points to 3.75%. This is the lowest it’s been since October 2022 and the biggest rate drop since March 2020. What does this mean for you? Lower interest rates translate to more affordable mortgage payments. Whether you’re buying your first home, looking to refinance, or considering an upgrade, this could be the perfect time to make your move.
2. Mortgage Reforms: Making Homeownership More Affordable for Millennials and Gen Z
For many Canadians, especially Millennials and Gen Z, the dream of homeownership has been tough to reach. The high cost of monthly mortgage payments has been a major barrier—until now. As of August 1, 2024, first-time homebuyers purchasing new builds can stretch their payments over 30 years with insured mortgages, significantly lowering those monthly costs. And the federal government isn’t stopping there! Starting December 15, 2024, even more changes are coming:
- Increased Price Cap for Insured Mortgages: The insured mortgage cap is jumping from $1 million to $1.5 million. This means more buyers can qualify with a down payment of less than 20%, reflecting today’s housing prices.
Expanded 30-Year Amortization: Now, not only first-time buyers but all buyers of new builds—including condos—can benefit from a 30-year mortgage amortization. By spreading payments out over a longer period, homeowners can lower their monthly payments, making it easier to get into the market.
These reforms, along with a new provision allowing homeowners to switch lenders without another mortgage stress test, are part of the government’s bold plan to build nearly 4 million new homes across Canada. It’s the biggest housing initiative in Canadian history—and it’s designed to help more Canadians achieve their homeownership dreams.
3. New Opportunities for Homeowners: Turn Unused Space Into Income
Do you have unused space in your home, like a basement or garage? You could soon turn it into a valuable rental suite. Thanks to new municipal zoning reforms across Canada’s major cities, it’s now easier and more affordable to convert these spaces into self-contained rental units—like basement apartments or laneway homes. Not only can this provide much-needed housing for others, but it could also be a great source of extra income for homeowners, especially for seniors looking to age in place.
Starting January 15, 2025, a new insured mortgage refinancing product will be available to help homeowners fund these projects. Here are the highlights:
You can borrow up to 90% of your home’s value, including the value of the new rental suite.
The new unit must be self-contained (with its own entrance, kitchen, and bathroom) and meet all municipal zoning requirements.
You can add up to four units on your property.
The financing can be spread over 30 years to keep payments manageable, but the total loan must not exceed the cost of the project.
If you’ve been thinking about adding a rental unit, now’s the time to take advantage of this incredible opportunity!
by Rachel Markus