The Government of Canada has announced a series of comprehensive mortgage reforms designed to make homeownership more attainable, particularly for younger Canadians. Rising mortgage costs have long been a barrier to buying a home, especially for Millennials and Gen Z. In response, new rules were introduced on August 1, 2024, allowing 30-year insured mortgages for first-time buyers purchasing newly constructed homes.

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced further changes to make mortgages more affordable and homeownership more accessible. Key reforms include:

• Raising the cap on insured mortgages from $1 million to $1.5 million starting December 15, 2024. This reflects current housing market conditions and will help more Canadians qualify for a mortgage with less than a 20% down payment.

• Expanding eligibility for 30-year mortgage amortizations to all first-time homebuyers and buyers of new builds, effective December 15, 2024, reducing monthly payments and boosting affordability. This also aims to encourage new housing construction, addressing the ongoing housing shortage.

These reforms build on the enhanced Canadian Mortgage Charter from Budget 2024, which allows insured mortgage holders to switch lenders at renewal without undergoing another mortgage stress test. This fosters greater competition and ensures that Canadians can secure the best mortgage rates when renewing.

These changes represent the most significant mortgage reforms in decades, forming part of the government's broader plan to build nearly 4 million homes—the largest housing initiative in Canadian history. Additional regulatory updates will be introduced in the coming weeks.

In addition to making mortgages more accessible, the federal government is taking steps to protect homebuyers and renters. Today, blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights were unveiled. These new policies, developed in partnership with provinces and territories, aim to eliminate unfair practices, simplify leases, and increase transparency in the housing market. The government is also leveraging the $5 billion Canada Housing Infrastructure Fund to encourage provincial action on issues like renovictions, blind bidding, and standardized lease agreements.

Quotes
“We’ve already helped more than 750,000 Canadians save for a down payment through the Tax-Free First Home Savings Account. Now, with these bold mortgage reforms, we are making it easier for Canadians—especially younger generations—to achieve homeownership. By raising the insured mortgage cap and extending repayment terms, we are unlocking homeownership for more people and encouraging lender competition to secure better rates.”
— The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

“Everyone deserves a safe, affordable home. These new mortgage measures will significantly help Canadians, especially first-time buyers, as they enter the housing market.”
— The Honourable Sean Fraser, Minister of Housing, Infrastructure, and Communities

Quick Facts

• The enhanced Canadian Mortgage Charter ensures that Canadians facing mortgage difficulties have access to tailored relief, and supports first-time homebuyers.

• Mortgage loan insurance enables Canadians to finance up to 95% of their home’s purchase price, helping them secure competitive interest rates with smaller down payments.

• The government’s housing plan, the largest in Canadian history, will unlock nearly 4 million new homes to make housing more affordable.

• The Tax-Free First Home Savings Account allows Canadians to save up to $8,000 annually and $40,000 in total, tax-free, towards a down payment.

• The Home Buyers’ Plan limit was increased from $35,000 to $60,000 in Budget 2024, allowing first-time buyers to withdraw from their Registered Retirement Savings Plan (RRSP) to build or buy their first home. This can be combined with the Tax-Free First Home Savings Account for maximum savings.

Source: www.canada.ca

The Ottawa real estate market showed signs of growth in July 2024, with 1,241 homes sold through the MLS® System of the Ottawa Real Estate Board (OREB). This represents a 13.6% increase compared to July 2023.

However, home sales were still 7.1% below the five-year average and 8.8% below the 10-year average for July. Despite this, year-to-date sales figures were encouraging, with 8,349 units sold by July 2024, marking a 5.5% increase from the same period in 2023.

The market’s performance is a positive signal amidst the usual summer slowdown, reflecting growing buyer confidence and a steady stream of new listings. Recent policy changes, including interest rate cuts and extended mortgage amortization periods for first-time buyers, could further support the market, though supply challenges remain.

Price Trends

The MLS® Home Price Index (HPI) provides a detailed view of price trends:

The overall MLS® HPI composite benchmark price in July 2024 was $648,900, up slightly by 0.1% from July 2023.

Single-family homes had a benchmark price of $734,700, down 0.1% year-over-year.

Townhouse/row units saw a benchmark price of $506,100, an increase of 3.4% compared to last year.

The benchmark price for apartments was $422,800, a decrease of 0.9% from July 2023 levels.

The average price of homes sold in July 2024 stood at $679,610, reflecting a 2.1% decrease from July 2023. The year-to-date average price, however, showed a slight increase of 1.0%, reaching $681,082. The total dollar volume of home sales in July 2024 was $843.3 million, an 11.3% increase from July 2023.

Inventory and New Listings

New residential listings in July 2024 increased by 17.1% from the previous year, totaling 2,231 new listings. Active residential listings at the end of July 2024 numbered 3,480 units, a substantial 37.0% increase from July 2023. The months of inventory, which indicates how long it would take to sell current listings at the current sales pace, rose to 2.8 months, up from 2.3 months in July 2023.

These statistics reflect a market that is gaining momentum, with increasing buyer activity and a growing inventory, although challenges around supply and affordability persist.

Source: Ottawa Real Estate Board

Do you often find yourself browsing listings and dreaming about your next move? If so, it’s essential to look beyond listing prices and down payments. Whether you're looking to upgrade or make your first investment, it's crucial to consider various financial aspects before buying a home. Here are some key expenses to factor into your decision:

Utilities

Upgrading to a larger home or one with older, less efficient appliances can significantly impact your utility costs. It's important to estimate these additional expenses accurately. Consider the size of the home, the age and efficiency of the heating, cooling, and water systems, and any additional appliances that might come with the property. Add these estimated costs to your current monthly budget to see how a move might affect your overall spending. Doing this will help you avoid any surprises when your first utility bill arrives after the move.

Mortgage Penalty

Breaking your current mortgage term early might come with a penalty, which is usually around three months' worth of interest. However, this amount can vary depending on your lender and the terms of your mortgage. It's crucial to read the fine print of your mortgage agreement and understand the penalties for early repayment or refinancing. In some cases, negotiating with your lender for a lower penalty or even exploring the possibility of porting your mortgage to the new property might be beneficial. Always consult with your financial advisor to understand the best course of action.

Moving Costs

Moving is never just about transporting your belongings from one place to another. There are numerous additional expenses to consider. If you plan to hire professional movers, get quotes from multiple companies and check for any hidden fees, such as charges for moving large items or extra insurance. If you opt for a DIY move, factor in the cost of renting a moving truck, fuel, and possibly temporary storage. Don’t forget smaller costs like packing materials or even throwing a pizza party to thank friends who help you move. If your schedule allows, consider moving during the off-peak season when costs tend to be lower.

Legal Fees

Hiring a trusted real estate lawyer is essential to ensure that all the legal aspects of your home purchase are handled correctly. Legal fees can vary widely, so it’s important to understand what services are included in the fee structure. These services typically include reviewing the purchase agreement, conducting a title search, handling the transfer of funds, and registering the new property with the local land registry office. Always get a detailed breakdown of the estimated costs and confirm these with your lawyer before you sign any offers. This will help you avoid any unexpected charges at closing.

Additional Considerations

Beyond these primary expenses, there are other costs to consider when buying a home. These might include home inspection fees, property taxes, insurance, and potential renovations or repairs needed immediately after purchase. A thorough home inspection can reveal issues that might not be apparent during a regular viewing and can give you leverage in negotiating the purchase price or requesting repairs before closing.

By carefully considering all these financial aspects, you can make a well-informed decision and ensure that your dream move doesn't turn into a financial nightmare. Planning ahead and budgeting for these expenses will help you transition smoothly into your new home and enjoy it from day one.

Ready to dive deeper into the home-buying process? Visit our latest blog for comprehensive tips and insights to guide you every step of the way. Contact us to ensure you're well-prepared for a successful move by uncovering all potential hidden costs!

First-time buyers of new construction homes in Canada can now access longer mortgage amortization periods.

Effective August 1st, 2024, lenders can offer 30-year amortizations for insured mortgages to first-time homebuyers of new construction homes, following a modification by the federal government. Previously, the maximum amortization for an insured mortgage—one requiring mortgage insurance due to a down payment of less than 20%—was 25 years. Homes priced at $1 million or more automatically require a 20% down payment and an uninsured mortgage loan.

The federal government states that extending payments over an additional five years will help lower monthly mortgage payments, making housing costs more affordable for young Canadians and incentivizing the construction of much-needed housing supply.
“For every young Canadian who wants to own a home, we want them to qualify for a mortgage and afford their first home. One of the biggest hurdles to homeownership for younger Canadians is qualifying for a mortgage and managing the monthly payments,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance, in a press release. “That is why, starting August 1, first-time buyers of new builds will be able to reduce their monthly payments with up to 30-year mortgages. This is just one of many new measures our government is implementing to make homeownership a reality for younger Canadians.”

What do I need to qualify for a new build 30-year amortization?
If you’re a first-time buyer shopping for a new construction home and plan to take out a 30-year mortgage, here are some requirements to keep in mind:

• At least one borrower on the application must be a first-time homebuyer, meaning they have never purchased a home before and have not occupied a home as a principal residence that they or their current spouse or common-law partner have owned in the last four years.
• The home being purchased must be newly constructed, meaning it has not been previously occupied for residential purposes.
• Only high-ratio mortgages will be applicable—mortgages where the loan amount exceeds 80% of the home price (i.e., has a down payment of less than 20%).
• All other eligibility criteria for government-guaranteed mortgage insurance will still apply.

Thirty-year amortizations for insured new build mortgages were first announced in the 2024 federal budget, alongside other affordable housing measures.

Source: Royal LePage Team Realty

Despite increasing inventory levels, many of Canada’s homebuyers have remained cautious this spring, leading to more balanced and less intense market conditions in the past month.

The latest report from the Canadian Real Estate Association (CREA) shows that home sales across Canadian MLS Systems decreased by 1.7% from March to April 2024. However, actual sales activity was 10.1% higher than in April of the previous year.

Meanwhile, newly listed homes saw a 2.8% increase in April 2024 compared to March. With slower sales and more new listings, the total number of homes on the market surged by 6.5%, reaching its highest point since just before the COVID-19 pandemic. This represents one of the largest monthly increases on record, second only to the market slowdown in early 2022.

James Mabey, Chair of CREA’s 2024-2025 Board of Directors, commented in the monthly report, "After a long hibernation, the spring market is now officially underway. The increase in listings is resulting in the most balanced market conditions we’ve seen at the national level since before the pandemic. Mortgage rates are still high, and it remains challenging for many to enter the market, but for those who can, it’s the first spring market in some time where they can shop around, take their time, and exercise some bargaining power. Given the demand, it's uncertain how long this will last."

With sales declining and new listings increasing in April, the national sales-to-new listings ratio dropped to 53.4%, slightly below the long-term average of 55%. By the end of April, there were 4.2 months of inventory nationwide, up from 3.9 months at the end of March. This is the highest level since the pandemic began and exceeds the long-term average of five months.

Shaun Cathcart, CREA’s Senior Economist, noted, "April 2023 saw a surge of buyers re-entering a market with new listings at 20-year lows, whereas this spring has been the opposite, with a healthier number of properties to choose from but less enthusiasm on the demand side."

The national average home price in April 2024 was $703,446, down 1.8% from April 2023. The National Composite MLS Home Price Index (HPI) remained unchanged from March to April, marking the third consecutive month of stable prices. Regionally, prices are mostly stable across the country, except in Calgary, Edmonton, and Saskatoon, where they have been steadily rising since the beginning of last year.

Source:https://blog.royallepage.ca