Ottawa – Deputy Prime Minister Chrystia Freeland announced mortgage reform details to ensure Canadians can access lower monthly mortgage payments by December 15. She said:
I will talk about the Canadian economy and provide an update on the new mortgage rules announced last week. Then Minister Fraser will speak about the work being done on the Canada Housing Infrastructure Fund, and Minister Duclos will speak about the new blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights and how they are tied to our Canada Housing Infrastructure Fund.
I just want to start by highlighting some of the positive news we’ve been receiving about the Canadian economy. Canada is leading the G7 in achieving a soft landing. We had some good news last week that inflation was 2 per cent in August. That means inflation has been in the Bank of Canada’s target range for eight months in a row, and it is at a 42-month low.
Canada has now been the first G7 country to cut interest rates for the first time, the first G7 country to cut interest rates for a second time, and the first G7 country to cut interest rates for a third time, and we have now seen wages outpacing inflation for 19 months in a row. The IMF is forecasting that Canada will have the second-strongest growth in the G7 this year and the strongest growth in the G7 next year.
It has been a really hard time for Canadians since COVID and the COVID recession, and these are some promising signs.
What I want to talk about specifically today is the new mortgage rules that we announced yesterday and some technical guidance that we are releasing today, that will be helpful to people, to Canadians seeking to take advantage of these new rules. And that technical guidance has been essential for Canadian financial institutions to make it possible for them to make these new mortgages available.
I have been having meetings yesterday and last week with the leaders of the Canadian financial institutions, with the Canadian Bankers Association, to ensure they are ready to make these new mortgages available on December 15th, to ensure they have all the information and the technical details they need from the government. And they have assured me that they do and that they will be ready.
The specific technical information that we’re releasing today is on the price cap for insured mortgages. We announced last week that would go from $1 million to $1.5 million. We’re announcing today what the down payment rules will be. Currently, for your first $500,000 of the purchase price, the down payment needs to be 5 per cent. And for the next $500,000, the down payment needs to be 10 per cent.
What we’re doing is simply extending that, so that for the first $500,000 in insured mortgages, your down payment will need to be 5 per cent. For the remaining up to $1 million, the down payment will need to be 10 per cent.
Very simple, very straightforward.
It is very much in line with how the system works today, simply adding an additional $500,000 on top at the same 10 per cent level. Simple, straightforward, simple for financial institutions, simple for Canadians.
I do just want to remind people that we have also extended amortizations to 30 years for all first-time home buyers and for all buyers of new builds. That as well is effective December 15th.
Taken together, we believe these measures will help first-time home buyers.
They are part of our plan for fairness for every generation, to help young Canadians achieve that dream of home ownership, and with the focus on new builds, they are also going to help on the supply side by creating more demand focused on those new builds, which we urgently need.
These measures are the most significant mortgage reforms in decades. It’s all part of our plan to build 4 million new homes and make housing more affordable, especially for young people. Our government understands the importance of delivering fairness for every generation of Canadians.
Thank you very much.