Mortgage changes: Cheaper entry into housing market at steeper costs

Mortgage rule changes allow easier entry into the housing market with lower monthly payments, but also an increased cost of repaying a mortgage.

The federal government released details of its mortgage reform plan on Tuesday, outlining changes to eligibility for smaller down payments and extended amortization periods.

The Department of Finance said two key changes would be implemented by Dec. 15, 2024:

This means more home buyers are eligible for lower down payments and extended loan repayment periods.

It’s a move that would lower the barrier to entry into the housing market and drop monthly payments — but also one that would increase the overall cost of repaying a mortgage for those taking advantage of the relaxed requirements.

Here’s how the numbers break down:

Previously, anyone purchasing a home for more than $1 million was required to front a minimum 20 per cent down payment to qualify for an insured mortgage.

That cap is being increased to $1.5 million, opening access for those in cities like Toronto and Vancouver, where average homes eclipse the million-dollar mark.