Ottawa's proposed mortgage changes may help affordability in the short term, but there are risks to the stability of the Canadian financial system, one economist warns.
The federal government has unveiled its updated mortgage rules, which are set to take effect on Dec. 15. How will these new reforms affect the real estate market and homebuyers. Global News real estate expert Nicolas Markou joins 'Global News Morning' host Laura Casella with what you need to know.
For the typical homebuyer, Sondhi estimates the expanded 30-year amortizations will lead to an increase in purchasing power of around nine per cent. “It’s a bit of a double-edged sword there,” he said. “They do get that near-term boost to activity. But at the same time, affordability is worse than it would have been absent these policies, which then limits the impact.”Raising the insured mortgage cap to $1.5 million will allow for more Canadians to access more expensive homes without having to put 20 per cent down upfront.
He cites Bank of Canada research that shows higher loan-to-value ratios make homeowners more prone to defaulting on their mortgages.
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