Big Mortgage Rule Changes Coming to the Canadian Housing Market
Major updates to Canadian mortgage rules are on the horizon. Whether you're a first-time homebuyer or have purchased before, these changes could offer more flexibility in entering the Kelowna real estate market. But here’s the key question: Do we want housing to be easier to obtain, or do we want more affordable housing?
Understanding Kelowna’s Real Estate Market
To provide context, the average sale price for single-family homes in Kelowna is currently around $1,109,000. This year, there have been 759 sales over $1 million, while 2,671 properties under $1 million have also sold, ranging from lots to mobile homes. With these figures, the conversation around housing affordability becomes more pressing.
Upcoming Mortgage Changes
(Effective December 15, 2024)
1. Higher Price Limit for Insured Mortgages
The price limit for insured mortgages will increase from $1 million to $1.5 million, allowing more buyers to enter the market with less than a 20% down payment.
Who benefits?
Buyers feeling priced out of the market or struggling to find the right home within their budget. However, it’s important to remember that mortgage insurance will be added to the total mortgage cost.
2. Lower Down Payments for Homes Up to $1.5 Million
For homes priced below $1.5 million, the required down payment will now be:
- 5% on the first $500,000
- 10% on the remainder
This change makes it easier for buyers to enter the market sooner, though it’s crucial to remember that mortgage insurance applies for down payments under 20%.
Who benefits?
This is especially helpful for move-up buyers who may not have enough equity for a larger down payment but need to transition to a bigger home.
3. Longer Amortization Periods
First-time buyers purchasing new homes or resale properties can now choose an amortization period of up to 30 years, reducing their monthly payments.
For non-first-time buyers: If you're purchasing a resale home, the maximum amortization remains at 25 years, but for new builds, you can opt for 30 years, offering greater financial flexibility.
New Rules Coming January 15, 2025
4. Refinance Up to 90% of Your Home’s Value
Homeowners can now refinance their mortgage for up to 90% of their home’s value, including the added value from a secondary suite. This presents a great opportunity to build a rental suite or create extra space for family members.
5. Higher Price Limit for Refinancing
The government is also increasing the mortgage insurance price limit for refinancing homes with secondary suites to $2 million, giving homeowners more flexibility to improve their property.
Do These New Measures Address the Right Problem?
While these changes may make it easier to buy a home, do they really solve the housing affordability issue? Increasing demand without addressing the supply of homes may drive prices higher. The focus should be on building more homes—especially in areas like Kelowna, where inventory is limited.
In the meantime, if you can afford the payments, these new rules present a chance to secure your home or investment. But for those stretching their budget, there’s a risk of taking on more debt than they can handle.
Curious about how these changes could affect you in Kelowna’s real estate market?
Mark & Maddie Coons
Selling Kelowna Real Estate Group
(w)778-744-0872
(c)250-801-0361
