As you may well have heard, the federal government announced 2 significant changes to mortgage rules yesterday:
1. Extend the cap on insured mortgages from $1 million to $1.5 million - This means you can now put less than 20% down on purchases between $1 million to 1.5$ Million!
2. Broaden the 30 year amortization from first-timers from just new-build purchases, to resale properties too*
*Note: this change is for insured mortgages (less than 20% down) for first-timers only. Mortgages with more than 20% down already have access to 30-year products.
2. Longer amortization = lower payments = higher purchase price they qualify for / lower income required for the same purchase price.
E.g. With 10% down on a $600,000 property, payments are about $300 less a month on a 30 year amortization, compared to a 25 year. And the annual household income required to qualify is roughly $7000 less.
Coupled with the recent drop in rates and relatively flat values, affordability is at its highest since Q12022.
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