New federal government mortgage rules coming into force in December to increase accessibility for first-time home buyers could be “blunted” by a related increase in home prices as demand rises, says a TD Bank economist.
TD’s Rishi Sondhi wrote in an Oct. 16 note that home prices will likely rise by 2 to 4 percentage points next year because of the new measures.
The federal government announced what it called the “boldest” mortgage reforms in September, which include increasing the $1 million price cap on insured mortgages to $1.5 million. Homebuyers are required to take mortgage insurance if their downpayment is less than 20 percent.
First-time homebuyers and buyers of new builds will also be eligible to take on 30-year mortgages. The maximum amortization period was previously 25 years. The two new measures come into effect on Dec. 15….