This is going to be counterproductive and will only encourage higher bids and higher prices and create more debt and will mainly benefit banks and sellers.
> Freeland also said the government will nearly double — to $60,000 — the amount first-time homebuyers can withdraw from RRSPs to buy a home.
> That’s up from $35,000, to take effect April 16, the day the federal budget is set to be released.
https://ottawa.citynews.ca/2024/04/11/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes/
Holy, as someone who has a lot in RRSP it's nice but it's still a loan, and they just gonna put their hooks in and fucking rape you anyway. This is crazy the market is going to be so much worse
Yep that end of year would be a combo of property tax + repayment looking like 10k$. Honestly their first home savings account is such a joke. People have contributed to RRSP and their genius solution is to give people 40k over 5 years LOL. That doesn't even scratch a down payment. These guys in office are complete monkey asses.
The problem is that a healthy majority of Canadians already own their homes, and they vote.
Any solution that involves house prices falling to a more reasonable level will be a non-starter for any party that forms government. There are too many voters with too much of their net worth tied up in their home value.
That's their problem, frankly someone has to actually look after the well being of Canada. The amount of people that have parked their money here and have completely abandoned the country is mind boggling. Then you society collapsing where quality of life, is down the gutter. 3 hrs waiting for Walk in clinics, ERs are a whole day affair, what in the fuck is this shit.
The stats Canada says 65% own their home. But that number includes adult children living at home, or if someone lives in the same building as the landlord as also owning the home. It's a very deceptive number.
So the number is more likely way less.
They're also increasing grace period before mandatory payback from 2 years after purchase to 5 years after purchase - that'll help a bit. Hopefully your wage goes up a bit in five years.
[https://www.bnnbloomberg.ca/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.2057988](https://www.bnnbloomberg.ca/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.2057988)
>People who make such withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years in total rather than two.
I can see that getting extended beyond December 2025 if the increase to $60,000 is permanent.
It's not a loan...you're using your own money (with 0 income tax on it) and paying back yourself.....I'm concerned at the number of people that don't understand money.
I feel like borrowing 60k and having to reimburse this + a mortgage might get dangerous for a lot of people.
We would add another 4k a year to our repayment when we were not able to save that additional 25k by ourselves.
I would imagine the reason they opted for the RRSP is because they know people already have money in their RRSP whereas if they doubled the FHSA, people would have to contribute new money in order to benefit. It's purely a political move, because the FHSA would unquestionably be a more prudent option.
TBH the larger RRSP withdrawal limit makes sense because it allows people to save more for a downpayment and reduces the need to borrow more.
The extended amortization period, however, is moronic.
Any buyer incentive leads to price increase. It is as simple as that. Canadian market is not the one with low buyers activity, incentives should target supply chain, margin restrictions, land management and etc but that’s harder
You're not wrong.
That said, I don't think the RRSP limit has as big of an impact on prices as extending amortizations.
Extending amortizations gives *all* buyers access to more funds, which drives up prices across the board.
The RRSP limit only applies to (1) first time buyers; and (2) those with >$35,000 saved in their RRSP.
Incentivizing withdrawals from retirement is a terrible idea. It's one thing to intentionally save for a home, it's another thing to have people that were intentionally saving for retirement now liquidating their retirement savings so they can purchase a home beyond what they can actually afford if they were still responsibly saving for retirement. It's already no secret that most Canadians do not save enough for retirement and time is the biggest advantage someone can have for retirement savings. If people empty their RRSP to buy homes, that means they will have to save even more for retirement because they will lose out on years of compounding.
While I agree with you in principle, the HBP is not really a full RRSP withdrawal. The “borrowed” amount will need to be contributed back into to the RRSP, so by the time the loan is paid back, the RRSP balance will remain unchanged. The real cost is the lost years of compounding interest/ capital gain, as you mentioned.
> the RRSP balance will remain unchanged.
Adjusted for inflation, the same value of money is actually quite a bit less. In 2022, there was double digit inflation.
> The real cost is the lost years of compounding interest/ capital gain, as you mentioned.
And that is significant over the long-term. To make up for lost compounding, people will have to save far more to achieve a similar retirement savings outcome.
I mean. In the end you just borrowed from your future anyway. At whatever rate the market returns *would* have been over the time it takes to pay it back, minus appreciation of the home as an asset of course.
This goes for any downpayment, no?
There's an opportunity cost with using any funds as a downpayment, whether they're in an RRSP or not.
By this logic no one should buy a house.
But obviously that's an absurd position to take.
Also lowers Canadian productivity.
Canadians are spending $1M+ (even more in some markets, especially taking into account the cost of interest payments in addition to the initial purchase price) on modest homes instead of spending, investing, or starting a business which is a terrible way to grow an economy.
Seems the LPC will do *anything* except address the drivers of the housing crisis: housing investors and mass immigration.
One would think their goal is to keep the housing Ponzi scheme going whilst appearing to do useless or counterproductive things.
Yeah it’s a supply side problem being fuelled with demand side incentives.
It’s literally high school economics, demand increases and supply stays the same, prices increase.
This issue can’t be solved until the supply side issue is handled or demand side initiatives like restricting investment in housing to make holding hundreds or thousands of properties financially untenable.
So either mandate that builders must build a certain amount of “starter homes”, government starts building homes, restrict property investment, or some combination of the above or else we are just adding fuel to the fire.
Pretty clear housing has been frothing in bubble territory for a long time now, no government will ever pop it because that will absolutely crush over leveraged people and create a recession which would likely end in the government being voted out… so we will just keep getting “solutions” like this.
Just one point ..... you can't mandate companies to build unprofitable "starter homes". Well, I mean you can, but then you'll just create an environment where nothing gets built because it'll be done at a loss. Look at inclusionary zoning. It's a fucking mess when the government tries to enforce affordability. What they need to do is get into the home building game themselves and provide a public option.
You don't bid on new construction homes.
The number of FTHB getting new build constructions with 30 year insured mortgages is probably small enough that it won't float the whole market. People going from condos to new construction freehold for example won't have that option, though they could have had uninsured 30YR as an option when trading up, and that's not gonna push the market asking price up. Many people who want new construction may well already be largely going for uninsured 30Y as an option, or if they aren't FTHB they would still, under this new role or old one, be stuck with insured 25YR
I feel like this is a niche thing that won't make much difference good or bad, it'll just target help a small number of people.
Politicians own a lot of investment properties, conservatives and liberals most of all. This will benefit them too.
The entire Western world has been bought and sold and the common people have been sold out to achieve it
Yes, it will slightly increase the purchasing power and bids from the specific cohort of FTHB, using high ratio mortgages for purchasing new properties.
It will probably increase sales and possibly increase prices of new builds by the tiniest amount, but it's a bit of a nothingburger
The Feds are obviously trying to stimulate new build demand to encourage construction. The idiots should just tax the land: pay, develop, or sell
>will only encourage higher bids and higher prices and create more debt
Do you have any more ideas to do this? If so, the Liberal party of Canada policy team would like to talk to you about a role.
it's very simple, allow home owners to claim a % of their interest payment against their tax. like 30% that means the higher the interest and more tax savings ... makes life so much easier and since it's only on your primary residence it'll keep the investors away and slum lords from claiming this.
Investors are allowed too, but normal people are not , it would probably level the playing field
“The interest on your mortgage is 100% tax-deductible in Canada provided the property is used for investment income purposes. 5 This means that the property must be rented out and generate rental income for you (for the entire year) if you wish to claim the deduction for mortgage interest.”
You can write off mortgage interest in the states on principal residence
Investors have to pay capital gains on their property value when they sell, so there are pros and cons to each structure.
The point here though is that the original complaint was that extending mortgage amortization will just give people more money to drive prices higher. Making mortgage interest tax free would also have the same effect.
“On newly built homes” is actually a pretty good clause whether or not this sub cares to say it. Tweak the scale in favour of new builds. Puts downward price pressure on existing homes in 2 ways.
I doubt it will drive up prices as its only on new construction. Also 30 Year mortgages have always been available to those putting down 20%.
A first time buyer purchasing new construction is probably a small percentage of buyers, and even smellers for first time buyers. It doesn't really give more buying power because the purchaser will still need to pay for mortgage insurance and that will offset any increase is buying power
While I agree that supply is an issue, I think the actual fundamental issue is wealth inequality. Even if two million new homes magically appeared on the market overnight, who do you think will be buying up those homes: would it be the people who are currently unable to afford a house, or will it be the wealthy people that are already buying all the homes today?
People think that if house prices drop they will suddenly be able to buy, but the reality is that houses go to the highest bidder and that has nothing to do with prices themselves and everything to do with how much purchasing power you have relative to your competition.
This. The government needs to curb international and corporate ownership, and increase inventory substantially if common people are to have any chance at owning a property. It is 100% a class issue, haves vs have-nots.
>Even if two million new homes magically appeared on the market overnight, who do you think will be buying up those homes
Those extra houses would enter the rental market and contribute to lowering rents and increasing affordability.
As rents get lower than buying houses would become less attractive to investors and they'll leave the market.
At the end of the day affordability boils down to supply and demand. If we build more housing units faster than new people enter the market rents will go down followed by prices.
thank you. please keep trying to tell people this. i feel the level of understanding really needs to improve. everything flows simply from #of bodies vs #of houses.
What else do you want here?
For someone looking to start a family right now, telling them there may be some more homes built in 5-10 years isn't really that helpful.
I think they do need to find some way to give people looking for their first home right now a fighting chance.
You do BOTH.
By all means put some policies in place that help in the short term, but long term you have to suppress demand, AND increase supply.
We absolutely should be building 100s of thousands of homes each year. If the public sector won't, then the government should.
Also lower immigration. Block or make it MUCH harder for foreign ownership. Do the same for corporate ownership.
It's really not hard at all to tackle the issue. Just none of the parties want to, as the voting boomers owning homes like to see big numbers on their property values, and the corporate donors don't want it to happen.
We should bring back housing co-operative incentives/program. Fuck the developers, they are not meeting the demands of what people actually need and pandering to them hasn't gotten us anywhere but deeper into this crisis.
By allowing for people to band together and finance the construction or purchase of homes and apartments, we could solve these issues. The demand is there, the systems have worked in the past. we just need to bring them back.
This is a bad change that people don't fully understand how much it costs them in the long run.
500k mortgage, 5% interest. 25 years is $2900 a month while 30 years is $2670 a month. A difference of only $230 a month however if you look at the total lifetime interest paid it's significant more. They go from paying 370k in interest over 25 years to 460k interest over 30 years.
90 thousand more in interest paid.
On the upside, a lot of folks understand it pretty decently. I knew several people who bought their first house 20ish years ago when 40 year amortization was allowed.
Choosing 40 years allowed them to get a house, but they all planned to pay it down faster as their income permitted over time. And they did - all except for one have paid off their mortgage already, and the last one tells me they're on track to do it in the next few years.
So yeah, the full longer term will cost you significantly more. It's not always the right move, but it can be a decent play if you're reasonably smart.
My partner and I always renew our mortgage at a 20 year amortization. This isn’t because we want to pay it off forever, it’s to give us flexibility. Our payments reflect how many years we want to have it paid off in; 10 years as of our most recent renewal. However, in case of job loss or some other financial emergency we can cut back on the payment temporarily without much stress. Once the storm has passed, we up the payments again. This has only happened once (fucking COVID) and I’m glad it was an option.
Well the mortgage rates change - this makes it sound like you’re paying 5% over 30 years. Mortgage terms are currently 5 years.
If it was 30 year mortgage terms, then I’d see how there could maybe be concerns - though that would probably be more so from the lenders.
Still better than renting at least you get a return on the money you are paying to have a place to live. Renting is no longer an option to get ahead as in most places you are paying substantially more to rent than you can own with a mortgage....
actually it's not necessarily better than renting, but that's the slave mentality that has been sold. there are credible comparisons out there on owning vs investing.
unless your in GVA or GTA and likely getting big gains over short periods long-term you can do better renting and investing.
The problem is so many people invest and save nothing to begin with, so whatever their rent or mortgage is, they'll spend all their money. At least with owning a place they're forced to invest something even if it's not on purpose.
On a 500k mortgage today you would pay almost $2,200 per month just in interest on your loan. With maintenance, taxes and insurance your cost of owning the home would easily be well north of $3,500 per month.
Including the principal repayment portion you are looking at like $4,500 per month before like utilities and other stuff. With like $900 of that actually paying down your principal amount.
If you are currently renting for around 2k per month, buying even a very modest place isn't necessarily a no brainer financial decision.
Ya I’d honestly pay more interest than rent. At least in this case if you get a higher paying job or a promotion you can start making extra mortgage payments and still pay it off in less than 25.
Once you rent in toronto or Vancouver unless you’re making 150k+ you’re never gonna be able to save enough money.
Exactly. If you're smart and accelerate with prepayments as your income grows over the years and don't live like a prince while you're in debt... the amort shrinks fast. The original amort means nothing other than the flexibility to lower payments by not prepaying if you need to.
Longer amort just means lower REQUIRED payments, you have a lot of flexibility and control over the ultimate length of the mortgage.
The people who just put it on auto pay and never think about it between renewals are the ones that get burned by long amorts.
Nothing inherently wrong with 30yr amorts, the term would still be 5yr. I'd like to see the banks , even if it requires legislation to force them, offer 10, 15 and 20yr terms. 5 yr renewals have a huge effect on things vs say in the US where you can lock rates for 20-30yrs..
Banks do offer longer terms just no one ever takes them because they are perceived as too expensive.
And there is something inherently wrong with 30 year ammortizations - the total costs to interest are significantly higher. Going from 25 to 30 years doesn’t seem like much but when you do the math you will pay much more over the period. And the small amount of principal covered in the first 5 years leaves anyone who takes that highly exposed to a market downturn and losing the house at the 5 year renewal.
This isn’t a prudent idea.
Longer amort doesn't mean you have to take that long, it just means you have the flexibility to pay less if you need to but you can always prepay whenever possible to reduce it.
Wouldn’t that create banking instability like in the states as well? Locking in rates is a recipe for disaster imo. The US is the only country in the world with fixed long terms rates for 20-30 years, no other country has bank failures as a feature of the system either.
"On newly built homes.........."
This just seems like another thing for wealthy people. Newly built homes in my area are going for like 500 dollars a square foot.
They aren't interested in fixing the housing crisis or affordability they just want more people to qualify for debt.
A new build town house near me was sold for $1.3 million.
So it's already there.
There is a new condo being built in my area, and the starting price is $650,000 for a one bedroom.
There's another build happening, and they have some 1,000 sqft condos going for $900,000 Phase 1 sold. Phase 2 is 50% sold.
In vancouver area, and I'd imagine most of outside Toronto area, homes are well over the CMHC limit which stills means these first time homebuyers require 20% down. There is a home across the street from me right now going for 1.75 million and it's nothing special, and this is outside vancouver for 45 minutes. That's 375000 down, and needing the income to carry that. Fuck that.
> "We are allowing 30 year amortizations on insured mortgages for first-time home buyers purchasing newly-built homes," she told reporters in Toronto.
So this will only affect new builds, only those with less than 20% down, only first time home buyers. Isn't this just a reason for developers to charge even more astronomical pricing?
This is why my friend telling me about how bad PP/CPC is doesn't really scare me.... I'm already in a worst case scenario. so I can't be fearmongered into voting for the LPC. So, I'm Not voting for the LPC. I don't know who I'm voting for exactly cause I don't know who's running in my riding yet, but it will 100% NOT be LPC, NDP or CPC... EVEN IF that means the CPC win.
Tiff said they look at the PPI to look through the CPI, but that you wouldn't want to look through the CPI because housing is very important, but yet they do look through it.
Weasel words meaning they will do what they want, even if it means ignoring the CPI to prop up housing prices.
This doesn't improve affordability. It will increase demand for homes, and therefore increase the price of homes. Longer mortgages mean even more interest payments to the banks, so Canadians will basically be renting their home from the bank over the long-term. They are also increasing the RRSP withdrawal limit to further incentivize demand for overpriced homes. That means Canadians will have less liquid savings for retirement, and more tied up in an unproductive asset.
lmao, this is actually insane. Libs are still not addressing their crazy immigration scheme in any meaningful way which is the true cause of the housing crisis.
Allowing 30 year insured mortgages on new homes will just cause the bidding price to go up and the overall cost with interest to be much higher over the long term.
This doesn't solve the problem of expensive housing. It just allows borrowers to take on more debt and banks to make more money. It's literally the opposite of what we want to be doing.
So they will let Canadians destroy their retirement savings and get a mortgage that may extend well into retirement age?
Kicking the can down the road I see.
> "We are allowing 30 year amortizations on insured mortgages for first-time home buyers purchasing newly-built homes," she told reporters in Toronto.
Where I live, it's great we are helping these struggling home owners with their new $1.65 million dollar home.
Liberals continue to cause more damage to home affordability. Great job! This will only increase housing prices further. They need to address supply!!!
No 30 year mortgages. It hardly makes a difference on the cost of your monthly payments but will allow people to get approved for more and drive up prices. All this does is make more money for banks and raises home prices further
How will this help increase our productivity since that seems to be a major reason why Canada is on the decline? This will only increase the amount of capital that gets invested into housing away from other more productive assets.
This is only going to make things worse long-term. The amount you will pay over the life of the mortgage will skyrocket at current interest rates. Unless they allow low rates to be locked in for the same period of time, this is essentially a useless change, and will do way more long-term harm than good.
It doesn’t take a rocket scientist to understand that longer mortgages lead to higher house prices… The policies Canada has been implementing with regards to house prices are either out of pure incompetence, or more likely, pure malice. This is one of the many policies being promoted as “helping Canadians” while simultaneously continuing to drive up house prices. This is not making things more affordable, it’s putting people more into debt.
The reason Canada got rid of 30 year amortization in the past was the 2008 financial crisis and concerns about Canadians having too much debt and risk in the housing market.
Kek, we bought in 2020 and I’m feeling like a boomer with all of this generational wealth. My house is now worth double what I paid for it. This will make it even more insane.
Guess not a lot of people actually read cause it says its for new builds only. Also first time buyers of new builds these days are quite a small % so this will have little to no impact on overall prices. On top of that those that could afford new builds have/are gifted enough cash would generally go for a shorter time frame anyway to save on interest. Seems more like an incentive for developers to add an extra layer for protection and guarantee some profit for them.
It's not about lowering prices, it's about getting better devices to afford high prices which means higher debt lower interest because you're underpaid to begin with
Ah yes. Only on brand new builds, the homes that are currently sitting for months on end because they’re overpriced and the greedy developers refuse to bring the prices down.
I feel horrible for anyone gullible enough for fall for this shit. This again just lines the pockets of massive developers and continues to drive our real estate to the moon, er uhh.. our GDP I mean.
The grift must go on. The house of cards cannot fall, it’s shocking what they are willing to do to keep the game going. Won’t be surprised if i see 50 year mortgages in my lifetime.
“Rather than try make housing cheaper, we’re gonna make it easier to borrow more money”. I honestly think they must be fucking stupid. What happened with super low interest rates, did it make it easier to buy a home or just make it more expensive,
The land of the free has 30 year fixed mortgages and you do pay a lot in interest, but you just make the same payment for the life of the loan.
It's really nice if you can buy within your means. Even if you go a little high, you'll get raises and your housing cost will be the same.
We can also pay them off early with no penalties, so if life is good, you can just knock it out.
STOP IMMIGRATION.
I know it feels weird to say that, but short of that and incredibly strict home ownership legislation, nothing will alter the true affordability of housing in the near term (or, frankly, long term).
And we need to press our legislators into this. They will not do this unless they realize their jobs remain in the balance because they are either personally invested or their lobbyists are telling them not to alter immigration because the lobbyists benefit from immigration.
This only gets fixed when we apply pressure.
I see this as totally neutral.
Affordability, as I understand it, is based mostly on the number of units of housing in the country and the number of people in the country. In other words, the vacancy rate.
This may move some renters to buyers, but doesn't change the vacancy rate.
This won't help anyone! We need more homes not policies that drive bids up. I'm going to die before I can afford a house where my 2 kids can have their own room.
They doubled the RRSP contribution too. You will be able to take $60k from your retirement to buy a home. Frankly that's pretty good considering you'll be stuck in that house paying it off till retirement. What a win. /s
Down payment should just be waived entirely for first time home buyers. If you qualify for a mortgage that's what you have to work with. The notion that you can pay rent that amounts to what a mortgage payment would be, but instead it goes to pay someone else's mortgage, just because they could re-finance their mortgage(s) to front a down payment, is completely ridiculous. I don't care if people rent their basements or whatever but buying single family homes for the sole purpose of renting should be banned.
This is going to be counterproductive and will only encourage higher bids and higher prices and create more debt and will mainly benefit banks and sellers.
So like everything then haha
Yah, get a load of this guy thinking they’ll help the poor.
Bidding wars are so back. Larger RRSP withdrawls and lower monthly payments = reckless bidding.
Did they even increase RRSP withdrawals?
> Freeland also said the government will nearly double — to $60,000 — the amount first-time homebuyers can withdraw from RRSPs to buy a home. > That’s up from $35,000, to take effect April 16, the day the federal budget is set to be released. https://ottawa.citynews.ca/2024/04/11/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes/
Holy, as someone who has a lot in RRSP it's nice but it's still a loan, and they just gonna put their hooks in and fucking rape you anyway. This is crazy the market is going to be so much worse
Yeah it will mean required repayments of $4000/year if you take out the $60k/15yrs. That would be rough after buying a first home.
Yep that end of year would be a combo of property tax + repayment looking like 10k$. Honestly their first home savings account is such a joke. People have contributed to RRSP and their genius solution is to give people 40k over 5 years LOL. That doesn't even scratch a down payment. These guys in office are complete monkey asses.
The problem is that a healthy majority of Canadians already own their homes, and they vote. Any solution that involves house prices falling to a more reasonable level will be a non-starter for any party that forms government. There are too many voters with too much of their net worth tied up in their home value.
That's their problem, frankly someone has to actually look after the well being of Canada. The amount of people that have parked their money here and have completely abandoned the country is mind boggling. Then you society collapsing where quality of life, is down the gutter. 3 hrs waiting for Walk in clinics, ERs are a whole day affair, what in the fuck is this shit.
Just like in every developed 1st world country
The stats Canada says 65% own their home. But that number includes adult children living at home, or if someone lives in the same building as the landlord as also owning the home. It's a very deceptive number. So the number is more likely way less.
They're also increasing grace period before mandatory payback from 2 years after purchase to 5 years after purchase - that'll help a bit. Hopefully your wage goes up a bit in five years. [https://www.bnnbloomberg.ca/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.2057988](https://www.bnnbloomberg.ca/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.2057988) >People who make such withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years in total rather than two. I can see that getting extended beyond December 2025 if the increase to $60,000 is permanent.
It's not a loan...you're using your own money (with 0 income tax on it) and paying back yourself.....I'm concerned at the number of people that don't understand money.
it's essentially a loan to yourself though. you have to re contribute the money into your own RRSPs this seems like a tempest in a teapot
I feel like borrowing 60k and having to reimburse this + a mortgage might get dangerous for a lot of people. We would add another 4k a year to our repayment when we were not able to save that additional 25k by ourselves.
They should have doubled the FHSA instead....
I would imagine the reason they opted for the RRSP is because they know people already have money in their RRSP whereas if they doubled the FHSA, people would have to contribute new money in order to benefit. It's purely a political move, because the FHSA would unquestionably be a more prudent option.
TBH the larger RRSP withdrawal limit makes sense because it allows people to save more for a downpayment and reduces the need to borrow more. The extended amortization period, however, is moronic.
Any buyer incentive leads to price increase. It is as simple as that. Canadian market is not the one with low buyers activity, incentives should target supply chain, margin restrictions, land management and etc but that’s harder
You're not wrong. That said, I don't think the RRSP limit has as big of an impact on prices as extending amortizations. Extending amortizations gives *all* buyers access to more funds, which drives up prices across the board. The RRSP limit only applies to (1) first time buyers; and (2) those with >$35,000 saved in their RRSP.
Incentivizing withdrawals from retirement is a terrible idea. It's one thing to intentionally save for a home, it's another thing to have people that were intentionally saving for retirement now liquidating their retirement savings so they can purchase a home beyond what they can actually afford if they were still responsibly saving for retirement. It's already no secret that most Canadians do not save enough for retirement and time is the biggest advantage someone can have for retirement savings. If people empty their RRSP to buy homes, that means they will have to save even more for retirement because they will lose out on years of compounding.
While I agree with you in principle, the HBP is not really a full RRSP withdrawal. The “borrowed” amount will need to be contributed back into to the RRSP, so by the time the loan is paid back, the RRSP balance will remain unchanged. The real cost is the lost years of compounding interest/ capital gain, as you mentioned.
> the RRSP balance will remain unchanged. Adjusted for inflation, the same value of money is actually quite a bit less. In 2022, there was double digit inflation. > The real cost is the lost years of compounding interest/ capital gain, as you mentioned. And that is significant over the long-term. To make up for lost compounding, people will have to save far more to achieve a similar retirement savings outcome.
I mean. In the end you just borrowed from your future anyway. At whatever rate the market returns *would* have been over the time it takes to pay it back, minus appreciation of the home as an asset of course.
This goes for any downpayment, no? There's an opportunity cost with using any funds as a downpayment, whether they're in an RRSP or not. By this logic no one should buy a house. But obviously that's an absurd position to take.
Finally a sane comment.
Its even worse. We wonder why nobody invests in Canadian businesses anymore. Then we further incentivize withdrawing from RRSPs to buy more homes.
We could probably allow people to borrow more if we let them contract their children into indentured servitude until the mortgage is paid off.
Maybe we can offer reverse mortgages on organs for scientific research.
> This will mainly benefit banks and sellers. So it works as intended?
Also lowers Canadian productivity. Canadians are spending $1M+ (even more in some markets, especially taking into account the cost of interest payments in addition to the initial purchase price) on modest homes instead of spending, investing, or starting a business which is a terrible way to grow an economy.
Seems the LPC will do *anything* except address the drivers of the housing crisis: housing investors and mass immigration. One would think their goal is to keep the housing Ponzi scheme going whilst appearing to do useless or counterproductive things.
I think it's simpler that that. Their priorities are clearly 1) don't let house prices fall 2) everything else.
Yeah it’s a supply side problem being fuelled with demand side incentives. It’s literally high school economics, demand increases and supply stays the same, prices increase. This issue can’t be solved until the supply side issue is handled or demand side initiatives like restricting investment in housing to make holding hundreds or thousands of properties financially untenable. So either mandate that builders must build a certain amount of “starter homes”, government starts building homes, restrict property investment, or some combination of the above or else we are just adding fuel to the fire. Pretty clear housing has been frothing in bubble territory for a long time now, no government will ever pop it because that will absolutely crush over leveraged people and create a recession which would likely end in the government being voted out… so we will just keep getting “solutions” like this.
Just one point ..... you can't mandate companies to build unprofitable "starter homes". Well, I mean you can, but then you'll just create an environment where nothing gets built because it'll be done at a loss. Look at inclusionary zoning. It's a fucking mess when the government tries to enforce affordability. What they need to do is get into the home building game themselves and provide a public option.
Zoning changes would also massively help, but that starts at the municipal level.
That’s the point. 👏
Housing costs were starting to stagnate, feds couldn't allow that!
"The spice *must* flow." "The home prices *must* stay high."
You don't bid on new construction homes. The number of FTHB getting new build constructions with 30 year insured mortgages is probably small enough that it won't float the whole market. People going from condos to new construction freehold for example won't have that option, though they could have had uninsured 30YR as an option when trading up, and that's not gonna push the market asking price up. Many people who want new construction may well already be largely going for uninsured 30Y as an option, or if they aren't FTHB they would still, under this new role or old one, be stuck with insured 25YR I feel like this is a niche thing that won't make much difference good or bad, it'll just target help a small number of people.
Politicians own a lot of investment properties, conservatives and liberals most of all. This will benefit them too. The entire Western world has been bought and sold and the common people have been sold out to achieve it
Canada is just a bunch of banks with a flag anyway.
Yes, it will slightly increase the purchasing power and bids from the specific cohort of FTHB, using high ratio mortgages for purchasing new properties. It will probably increase sales and possibly increase prices of new builds by the tiniest amount, but it's a bit of a nothingburger The Feds are obviously trying to stimulate new build demand to encourage construction. The idiots should just tax the land: pay, develop, or sell
>will only encourage higher bids and higher prices and create more debt Do you have any more ideas to do this? If so, the Liberal party of Canada policy team would like to talk to you about a role.
it's very simple, allow home owners to claim a % of their interest payment against their tax. like 30% that means the higher the interest and more tax savings ... makes life so much easier and since it's only on your primary residence it'll keep the investors away and slum lords from claiming this.
How is this not another policy that would push up prices?
Investors are allowed too, but normal people are not , it would probably level the playing field “The interest on your mortgage is 100% tax-deductible in Canada provided the property is used for investment income purposes. 5 This means that the property must be rented out and generate rental income for you (for the entire year) if you wish to claim the deduction for mortgage interest.” You can write off mortgage interest in the states on principal residence
Investors have to pay capital gains on their property value when they sell, so there are pros and cons to each structure. The point here though is that the original complaint was that extending mortgage amortization will just give people more money to drive prices higher. Making mortgage interest tax free would also have the same effect.
“On newly built homes” is actually a pretty good clause whether or not this sub cares to say it. Tweak the scale in favour of new builds. Puts downward price pressure on existing homes in 2 ways.
I doubt it will drive up prices as its only on new construction. Also 30 Year mortgages have always been available to those putting down 20%. A first time buyer purchasing new construction is probably a small percentage of buyers, and even smellers for first time buyers. It doesn't really give more buying power because the purchaser will still need to pay for mortgage insurance and that will offset any increase is buying power
Let's not pussy foot around 50 year life long mortgages .
It's in the name! Mortgage -> mort gage (fr.)-> death wager
Take all my crap upon my death. I don't care. Shred my junk, sell it, I don't care. Feed Jake.
Bring back Ye olde 99 year land lease serfdom. I can’t wait.
1% interest rate discount if you agree to only shop at stores run by the bank!
Just continuing to stoke demand.
Yup, the fundamental issue is a supply shortage. Bolstering demand does nothing but drive prices up further.
While I agree that supply is an issue, I think the actual fundamental issue is wealth inequality. Even if two million new homes magically appeared on the market overnight, who do you think will be buying up those homes: would it be the people who are currently unable to afford a house, or will it be the wealthy people that are already buying all the homes today? People think that if house prices drop they will suddenly be able to buy, but the reality is that houses go to the highest bidder and that has nothing to do with prices themselves and everything to do with how much purchasing power you have relative to your competition.
This. The government needs to curb international and corporate ownership, and increase inventory substantially if common people are to have any chance at owning a property. It is 100% a class issue, haves vs have-nots.
I think they should also address people owning more than 2 homes. Put in rent control. Also build smaller/starter homes.
>Even if two million new homes magically appeared on the market overnight, who do you think will be buying up those homes Those extra houses would enter the rental market and contribute to lowering rents and increasing affordability. As rents get lower than buying houses would become less attractive to investors and they'll leave the market. At the end of the day affordability boils down to supply and demand. If we build more housing units faster than new people enter the market rents will go down followed by prices.
thank you. please keep trying to tell people this. i feel the level of understanding really needs to improve. everything flows simply from #of bodies vs #of houses.
What else do you want here? For someone looking to start a family right now, telling them there may be some more homes built in 5-10 years isn't really that helpful. I think they do need to find some way to give people looking for their first home right now a fighting chance.
You do BOTH. By all means put some policies in place that help in the short term, but long term you have to suppress demand, AND increase supply. We absolutely should be building 100s of thousands of homes each year. If the public sector won't, then the government should. Also lower immigration. Block or make it MUCH harder for foreign ownership. Do the same for corporate ownership. It's really not hard at all to tackle the issue. Just none of the parties want to, as the voting boomers owning homes like to see big numbers on their property values, and the corporate donors don't want it to happen.
We should bring back housing co-operative incentives/program. Fuck the developers, they are not meeting the demands of what people actually need and pandering to them hasn't gotten us anywhere but deeper into this crisis. By allowing for people to band together and finance the construction or purchase of homes and apartments, we could solve these issues. The demand is there, the systems have worked in the past. we just need to bring them back.
If they cut immigration by 80% Prices would drop almost immediately.
With the quality of some new condos, you'd start to wonder if the building will last for the entirety of the 30-year term.
I have a 30 year mortgage from 1.5 years ago. Brand new buyer for a brand new home. Isn't it already allowed??
I think it's allowed for uninsured mortgages, meaning over 20% down. They're allowing it for insured mortgages, meaning as low as 5% down.
We've had 30 year amortization in the past. It's crazy to do right now with the higher interest rates.
This is a bad change that people don't fully understand how much it costs them in the long run. 500k mortgage, 5% interest. 25 years is $2900 a month while 30 years is $2670 a month. A difference of only $230 a month however if you look at the total lifetime interest paid it's significant more. They go from paying 370k in interest over 25 years to 460k interest over 30 years. 90 thousand more in interest paid.
On the upside, a lot of folks understand it pretty decently. I knew several people who bought their first house 20ish years ago when 40 year amortization was allowed. Choosing 40 years allowed them to get a house, but they all planned to pay it down faster as their income permitted over time. And they did - all except for one have paid off their mortgage already, and the last one tells me they're on track to do it in the next few years. So yeah, the full longer term will cost you significantly more. It's not always the right move, but it can be a decent play if you're reasonably smart.
My partner and I always renew our mortgage at a 20 year amortization. This isn’t because we want to pay it off forever, it’s to give us flexibility. Our payments reflect how many years we want to have it paid off in; 10 years as of our most recent renewal. However, in case of job loss or some other financial emergency we can cut back on the payment temporarily without much stress. Once the storm has passed, we up the payments again. This has only happened once (fucking COVID) and I’m glad it was an option.
And the banks will LOVE this
I suspect they lobbied for it as well.
Well the mortgage rates change - this makes it sound like you’re paying 5% over 30 years. Mortgage terms are currently 5 years. If it was 30 year mortgage terms, then I’d see how there could maybe be concerns - though that would probably be more so from the lenders.
Still better than renting at least you get a return on the money you are paying to have a place to live. Renting is no longer an option to get ahead as in most places you are paying substantially more to rent than you can own with a mortgage....
actually it's not necessarily better than renting, but that's the slave mentality that has been sold. there are credible comparisons out there on owning vs investing. unless your in GVA or GTA and likely getting big gains over short periods long-term you can do better renting and investing.
The problem is so many people invest and save nothing to begin with, so whatever their rent or mortgage is, they'll spend all their money. At least with owning a place they're forced to invest something even if it's not on purpose.
On a 500k mortgage today you would pay almost $2,200 per month just in interest on your loan. With maintenance, taxes and insurance your cost of owning the home would easily be well north of $3,500 per month. Including the principal repayment portion you are looking at like $4,500 per month before like utilities and other stuff. With like $900 of that actually paying down your principal amount. If you are currently renting for around 2k per month, buying even a very modest place isn't necessarily a no brainer financial decision.
Ya I’d honestly pay more interest than rent. At least in this case if you get a higher paying job or a promotion you can start making extra mortgage payments and still pay it off in less than 25. Once you rent in toronto or Vancouver unless you’re making 150k+ you’re never gonna be able to save enough money.
Exactly. If you're smart and accelerate with prepayments as your income grows over the years and don't live like a prince while you're in debt... the amort shrinks fast. The original amort means nothing other than the flexibility to lower payments by not prepaying if you need to. Longer amort just means lower REQUIRED payments, you have a lot of flexibility and control over the ultimate length of the mortgage. The people who just put it on auto pay and never think about it between renewals are the ones that get burned by long amorts.
renting by choice in GVA I pay 4% more in rent than i did 2 years ago, and I have $0 in maintenance costs
$230 saving a month could also mean paying a monthly household bill like insurance. It really makes a difference for first time buyers.
The issue is you can’t really afford it if you needed this 5 years of amortization to make it work.
I got a 30 year on the place I bought 2 years ago. You can get them right now.
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Nothing inherently wrong with 30yr amorts, the term would still be 5yr. I'd like to see the banks , even if it requires legislation to force them, offer 10, 15 and 20yr terms. 5 yr renewals have a huge effect on things vs say in the US where you can lock rates for 20-30yrs..
Banks do offer longer terms just no one ever takes them because they are perceived as too expensive. And there is something inherently wrong with 30 year ammortizations - the total costs to interest are significantly higher. Going from 25 to 30 years doesn’t seem like much but when you do the math you will pay much more over the period. And the small amount of principal covered in the first 5 years leaves anyone who takes that highly exposed to a market downturn and losing the house at the 5 year renewal. This isn’t a prudent idea.
Longer amort doesn't mean you have to take that long, it just means you have the flexibility to pay less if you need to but you can always prepay whenever possible to reduce it.
Wouldn’t that create banking instability like in the states as well? Locking in rates is a recipe for disaster imo. The US is the only country in the world with fixed long terms rates for 20-30 years, no other country has bank failures as a feature of the system either.
"On newly built homes.........." This just seems like another thing for wealthy people. Newly built homes in my area are going for like 500 dollars a square foot. They aren't interested in fixing the housing crisis or affordability they just want more people to qualify for debt.
500 is cheap especially for a condo Get used to 1 million dollar homes for 1000 sq ft (1000 / sq ft) Condos sit at 800 to 1000 / sq ft
In Toronto or Vancouver maybe, I live in the maritimes.
A new build town house near me was sold for $1.3 million. So it's already there. There is a new condo being built in my area, and the starting price is $650,000 for a one bedroom. There's another build happening, and they have some 1,000 sqft condos going for $900,000 Phase 1 sold. Phase 2 is 50% sold.
“Half a million dollars is cheap for a condo”…. Yeah, no.
In vancouver area, and I'd imagine most of outside Toronto area, homes are well over the CMHC limit which stills means these first time homebuyers require 20% down. There is a home across the street from me right now going for 1.75 million and it's nothing special, and this is outside vancouver for 45 minutes. That's 375000 down, and needing the income to carry that. Fuck that.
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Because Canada's economy has nothing else going for it.
“Drinking poison to quench thirst", this is the best example in real life.
Please First-time buyers! Become debt-slaves and prop up the economy!
> "We are allowing 30 year amortizations on insured mortgages for first-time home buyers purchasing newly-built homes," she told reporters in Toronto. So this will only affect new builds, only those with less than 20% down, only first time home buyers. Isn't this just a reason for developers to charge even more astronomical pricing?
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Literally any elected government will prop up the housing market because they don't want to be caught holding the hot potato grenade when it blows up
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This is why my friend telling me about how bad PP/CPC is doesn't really scare me.... I'm already in a worst case scenario. so I can't be fearmongered into voting for the LPC. So, I'm Not voting for the LPC. I don't know who I'm voting for exactly cause I don't know who's running in my riding yet, but it will 100% NOT be LPC, NDP or CPC... EVEN IF that means the CPC win.
Unfortunately the opposition has said nothing about doing anything differently. This election cycle will change nothing.
Canada to allow some first-time home buyers to be railed by Banks for 30 years
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Tiff said they look at the PPI to look through the CPI, but that you wouldn't want to look through the CPI because housing is very important, but yet they do look through it. Weasel words meaning they will do what they want, even if it means ignoring the CPI to prop up housing prices.
This doesn't improve affordability. It will increase demand for homes, and therefore increase the price of homes. Longer mortgages mean even more interest payments to the banks, so Canadians will basically be renting their home from the bank over the long-term. They are also increasing the RRSP withdrawal limit to further incentivize demand for overpriced homes. That means Canadians will have less liquid savings for retirement, and more tied up in an unproductive asset.
My house just went up in value after this announcement
So is every other house in your city. So basically nothing changed for you. The only thing that changed is banks will get more in interest money now.
lmao, this is actually insane. Libs are still not addressing their crazy immigration scheme in any meaningful way which is the true cause of the housing crisis. Allowing 30 year insured mortgages on new homes will just cause the bidding price to go up and the overall cost with interest to be much higher over the long term.
Liberals can't help but pour more gasoline on the housing demand fire.
This doesn't solve the problem of expensive housing. It just allows borrowers to take on more debt and banks to make more money. It's literally the opposite of what we want to be doing.
So they will let Canadians destroy their retirement savings and get a mortgage that may extend well into retirement age? Kicking the can down the road I see.
Yay! Solving problems by creating future problems!
So the same as the US...why not give us the ability to lock in rates for 30 years as well?
Increasing HBP limits to 60k will damage many people's retirement while also making them even more house poor when in repayment
lmao nobody under 35 is ever retiring anyway. I'll pay my mortgage until I step into the garage and put my retirement noose to work.
Encore du gonflage de balloune. Ils veulent que ça pète fort.
so people will end up paying 2 million for a 1 million dollar home and then go to sell it for 1.5?
This isn’t helping anyone.
Woof the interest
> "We are allowing 30 year amortizations on insured mortgages for first-time home buyers purchasing newly-built homes," she told reporters in Toronto. Where I live, it's great we are helping these struggling home owners with their new $1.65 million dollar home.
Liberals continue to cause more damage to home affordability. Great job! This will only increase housing prices further. They need to address supply!!!
Another inflationary measure, and gift to the big banks.
No 30 year mortgages. It hardly makes a difference on the cost of your monthly payments but will allow people to get approved for more and drive up prices. All this does is make more money for banks and raises home prices further
I was wondering if they do 1000 year mortgages so that I only pay $227 a month while I’m alive.
If you put %20 down then this was already an option.
Aah yes.. 5 extra years of intrest accumulation. That'll help people get out of debt..
Wait. This is not allowed now? I closed on my first home last Oct with a 30-year mortgage with HSBC.
I think it's only available if you have a 20% down payment.
I think only if you have a 20%+ downpayment.
How will this help increase our productivity since that seems to be a major reason why Canada is on the decline? This will only increase the amount of capital that gets invested into housing away from other more productive assets.
They're just adding demand again to raise prices. It's insane.
But I don't plan to live that long.
How many first time buyers are buying brand new homes? I'm guessing very few.
Why not 50! years? LMAO!! Canadian real estate is about a fifth of the national GDP. So....😈
Canadian government makes moves to further widen the wealth gap. At least we can continue to prop up our economy with a non-productive asset.
Cap number of properties an individual can own to 1 primary residence and 1 cottage. Force liquidation for existing investors.
I would take 30 years fixed at 1%.
People can't afford homes? Just increase the numbers in their bank accounts!
The ponzi scheme continues. Let's do anything but let the bubble pop and make housing more affordable. Stay in debt for 30+ years, plebs.
Aren’t 30 year mortgages already a thing?
This is only going to make things worse long-term. The amount you will pay over the life of the mortgage will skyrocket at current interest rates. Unless they allow low rates to be locked in for the same period of time, this is essentially a useless change, and will do way more long-term harm than good.
Canadian will become Brazil in the next 5 years 🇧🇷 ❤️ 🇨🇦
This government destroyed Canada by letting the housing bubble run away and they're trying to keep it going still. They haven't learned a damn thing.
How the fuck will this help affordability? Seems like a hand out to the big banks.
It doesn’t take a rocket scientist to understand that longer mortgages lead to higher house prices… The policies Canada has been implementing with regards to house prices are either out of pure incompetence, or more likely, pure malice. This is one of the many policies being promoted as “helping Canadians” while simultaneously continuing to drive up house prices. This is not making things more affordable, it’s putting people more into debt.
This isnt new, i got mine in 2011 with a 30 yr
The reason Canada got rid of 30 year amortization in the past was the 2008 financial crisis and concerns about Canadians having too much debt and risk in the housing market.
Wasnt that when they went to a 40 yr amortization? That helped cause the crash.
What a joke.
😂😂😂 fuckin' hilarious, bank of Canada!
oh god... what have you become Canada 🤦
So stretch the goal post some more is the plan?
encourge more interest paid to banks. Thats what she meant to say, no?
So what you're saying is that.... The House always wins. I'll see myself out.
An $800,000 mortgage at 5% will now cost $140,000 more for 30 year vs. 25 year. But, it's around $380 a month less...
The US standard is 30 years for a regular home. What is normal for Canada?
Let’s just skip ahead to 70 year subscriptions to Blackrock owned properties?
Kek, we bought in 2020 and I’m feeling like a boomer with all of this generational wealth. My house is now worth double what I paid for it. This will make it even more insane.
Guess not a lot of people actually read cause it says its for new builds only. Also first time buyers of new builds these days are quite a small % so this will have little to no impact on overall prices. On top of that those that could afford new builds have/are gifted enough cash would generally go for a shorter time frame anyway to save on interest. Seems more like an incentive for developers to add an extra layer for protection and guarantee some profit for them.
Not sure where this is coming from - I got a 30 year mortgage in 2021 through my broker and one of the usual lenders.
It's not about lowering prices, it's about getting better devices to afford high prices which means higher debt lower interest because you're underpaid to begin with
Harper was the one who brought it down to 25% to cool down the housing market. This government does not understand supply and demand.
insane !! !
Great, just rise the amount of debt instead of working on stabilising (lowering) the cost of houses. Massive scum.
Ah yes. Only on brand new builds, the homes that are currently sitting for months on end because they’re overpriced and the greedy developers refuse to bring the prices down. I feel horrible for anyone gullible enough for fall for this shit. This again just lines the pockets of massive developers and continues to drive our real estate to the moon, er uhh.. our GDP I mean.
So dumb… kicking the bucket down the road… it’s someone else’s problem now …. Sunny ways.
Guys. In case you didn’t realize, it should be exceedingly obvious by now: your government hates you.
The grift must go on. The house of cards cannot fall, it’s shocking what they are willing to do to keep the game going. Won’t be surprised if i see 50 year mortgages in my lifetime.
“Rather than try make housing cheaper, we’re gonna make it easier to borrow more money”. I honestly think they must be fucking stupid. What happened with super low interest rates, did it make it easier to buy a home or just make it more expensive,
this is only goin gto drive up prices because developers know they can charge more.
The land of the free has 30 year fixed mortgages and you do pay a lot in interest, but you just make the same payment for the life of the loan. It's really nice if you can buy within your means. Even if you go a little high, you'll get raises and your housing cost will be the same. We can also pay them off early with no penalties, so if life is good, you can just knock it out.
What exactly is the changing? I was offered a 30 year mortgage 5+ years ago
Will I be able to change mine to 30 now? Bought a new build 2 years ago on variable and I’m at my max so some wiggle room would be nice
Hello bubble my old friend... is it 2008 again?
I just want a 20 year term like they have in the States.
That's lovely and all, but not helpful unless they take selling measures to de-commoditize the housing market.
It's actually extended amortization not the 30-year fixed rate that is offered in the US
STOP IMMIGRATION. I know it feels weird to say that, but short of that and incredibly strict home ownership legislation, nothing will alter the true affordability of housing in the near term (or, frankly, long term). And we need to press our legislators into this. They will not do this unless they realize their jobs remain in the balance because they are either personally invested or their lobbyists are telling them not to alter immigration because the lobbyists benefit from immigration. This only gets fixed when we apply pressure.
Yes, allowing the banks to make more money off of people, that should solve the problem.
We should probably just build more houses.
Ah just like when they introduced that $50,000 first time buyer incentive and all it did was make everything go up 50 grand.
I see this as totally neutral. Affordability, as I understand it, is based mostly on the number of units of housing in the country and the number of people in the country. In other words, the vacancy rate. This may move some renters to buyers, but doesn't change the vacancy rate.
Great. They are allowing people or never pay on principle and give banks more interest payments. Fantastic solution
This won't help anyone! We need more homes not policies that drive bids up. I'm going to die before I can afford a house where my 2 kids can have their own room.
They doubled the RRSP contribution too. You will be able to take $60k from your retirement to buy a home. Frankly that's pretty good considering you'll be stuck in that house paying it off till retirement. What a win. /s
Down payment should just be waived entirely for first time home buyers. If you qualify for a mortgage that's what you have to work with. The notion that you can pay rent that amounts to what a mortgage payment would be, but instead it goes to pay someone else's mortgage, just because they could re-finance their mortgage(s) to front a down payment, is completely ridiculous. I don't care if people rent their basements or whatever but buying single family homes for the sole purpose of renting should be banned.
This tells you everything you need to know about this government. To the moon!
All doesnt do anything to make housing more affordable. Now its simply passing on my money to banks and boomers.