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

Ottawa's real estate market is a standout performer throughout the year, and here's why:

Steady Economic Growth

Ottawa’s economy benefits from key sectors like government, technology, and education. As the nation’s capital, it attracts government jobs, tech professionals from companies like Shopify, and students from local universities, driving consistent housing demand.

Diverse Housing Options

With options ranging from historic homes in The Glebe to modern condos in Downtown, Ottawa caters to all preferences and budgets. This diversity means both buyers and sellers can find what they're looking for, whether it’s a first home or an investment property.

Strong Rental Market

Ottawa’s rental market remains strong, supported by students, government employees, and tech workers. This steady demand is great for investors seeking reliable returns and for buyers who may want to rent before purchasing.

Quality of Life

High quality of life in Ottawa, including its clean environment, excellent healthcare, and abundant green spaces, makes it a desirable place to live and invest. This appeal keeps the market active and attractive for both buyers and sellers.

Market Trends and Timing

While Ottawa’s market has seasonal variations, its underlying stability offers year-round opportunities. Sellers can benefit from understanding market timing and maintaining their homes, while buyers should stay informed to seize the right moment.

In conclusion, Ottawa’s thriving real estate market offers benefits for both buyers and sellers. Its economic stability, diverse options, strong rental market, and high quality of life create a vibrant landscape for making informed real estate decisions.

For personalized advice and insights, contact us today!

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

In May 2024, the Ottawa Real Estate Board (OREB) reported a total of 1,545 homes sold through the MLS® System, marking a 9.2% decrease compared to May 2023. This figure was 3.7% lower than the five-year average and 13.2% below the ten-year average for May. Year-to-date, home sales reached 5,673 units over the first five months of the year, reflecting a 5.2% increase from the same period in 2023.

OREB President Curtis Fillier noted that Ottawa's early spring market remained steady, with an increase in new listings indicating growing seller confidence. However, some sellers may have awaited the Bank of Canada's interest rate announcement before making decisions, as the first interest rate cut in four years occurred. Nevertheless, supply issues and high home prices persist as challenges despite positive economic indicators.

By the Numbers – Prices:

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures.

• The overall MLS® HPI composite benchmark price was $651,300 in May 2024, a marginal gain of 1.2% from May 2023.

  • The benchmark price for single-family homes was $736,000, up 1.1% on a year-over-year basis in May.

  • By comparison, the benchmark price for a townhouse/row unit was $517,500, up 2.1% compared to a year earlier.

  • The benchmark apartment price was $425,000, up 2.0% from year-ago levels.

• The average price of homes sold in May 2024 was $690,683 increasing 0.8% from May 2023. The more comprehensive year-to-date average price was $679,862, increasing by 1.8% from the first five months of 2023.

• The dollar volume of all home sales in May 2024 was $1.06 billion, down 8.5% from the same month in 2023.

OREB cautions that the average sale price can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The calculation of the average sale price is based on the total dollar volume of all properties sold. Prices will vary from neighbourhood to neighbourhood.

By the Numbers – Inventory & New Listings

• The number of new listings saw an increase of 26.2% from May 2023. There were 3,034 new residential listings in May 2024. New listings were 23.2% above the five-year average and 10.2% above the 10-year average for the month of May.

• Active residential listings numbered 3,552 units on the market at the end of May 2024, a gain of 59.4% from May 2023. Active listings were 72.2% above the five-year average and 2.9% below the 10-year average for the month of May.

• Months of inventory numbered 2.3 at the end of May 2024, up from 1.3 in May 2023. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

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

Adjustable-rate mortgages (ARMs) present borrowers with a distinctive opportunity to leverage fluctuating interest rates, offering flexibility and potential cost savings over the loan's duration. Nevertheless, ARMs also entail inherent risks and uncertainties that borrowers should carefully weigh before opting for this mortgage type. This article delves into the advantages and disadvantages of adjustable-rate mortgages, aiding you in discerning whether an ARM suits your homeownership requirements.

Understanding Adjustable-Rate Mortgages (ARMs)

An adjustable-rate mortgage (ARM) is a home loan type wherein the interest rate remains unfixed for the loan's entirety. Instead, it fluctuates periodically based on changes in an index, such as the prime rate or the London Interbank Offered Rate (LIBOR). Typically, ARMs commence with an initial fixed-rate period, succeeded by adjustable-rate intervals where the interest rate can vary annually or at specified intervals.

The Pros of Adjustable-Rate Mortgages

• Lower Initial Interest Rates: ARMs often initiate with lower interest rates compared to fixed-rate mortgages, appealing to borrowers seeking reduced monthly payments and potential savings during the initial fixed-rate phase.

• Potential for Lower Payments: Should interest rates decrease or remain stable, ARM borrowers may experience decreased monthly payments during adjustable-rate periods, enhancing affordability and cash flow flexibility.

• Short-Term Ownership Benefits: ARMs can prove advantageous for borrowers planning to sell or refinance their homes within a few years, allowing them to capitalize on the lower initial interest rates while avoiding prolonged exposure to interest rate fluctuations.

• Rate Caps and Limits: Most ARMs incorporate rate caps and limits, constraining the extent to which the interest rate can fluctuate during each adjustment period and throughout the loan's lifespan. This provision offers borrowers a level of protection against significant rate changes.

The Cons of Adjustable-Rate Mortgages

• Interest Rate Risk: The primary drawback of ARMs lies in the uncertainty surrounding future interest rate movements. If interest rates surge substantially during the adjustable-rate periods, borrowers may face heightened monthly payments and increased financial strain.

• Payment Shock: Swift increases in interest rates can result in payment shock for ARM borrowers, causing a sudden and substantial rise in monthly mortgage payments that may prove challenging to afford, particularly for borrowers with fixed incomes.

• Budgeting Challenges: The variable nature of ARM payments can pose challenges in budgeting and financial planning, necessitating borrowers to accommodate potential changes in housing expenses over time.

• Long-Term Costs: While ARMs may offer lower initial interest rates, borrowers holding onto their mortgages for extended durations might end up paying more in interest over the loan's lifespan if interest rates soar during adjustable-rate periods.

Is an ARM Right for You?

Determining whether an adjustable-rate mortgage aligns with your homeownership needs hinges on various factors, including your financial situation, risk tolerance, and future plans. Reflect on the following questions:

1. Are you comfortable with the possibility of fluctuating interest rates and payments?

2. Do you intend to reside in your home for an extended period or consider selling/refinancing within a few years?

3. How do prevailing interest rate trends and economic conditions influence your decision?

4. Have you thoroughly assessed and comprehended the terms, features, and risks associated with the ARM product?

Ultimately, reaching out to a qualified mortgage advisor or financial planner can provide invaluable support in assessing your options and deciding whether an ARM aligns with your financial goals and preferences. Don't hesitate to contact us for a list of our trusted mortgage advisors and financial planners who can assist you further.