New Mortgage Rules Point to Increased Buying

Though home prices have dropped gradually in Niagara, they continue to be less than affordable for many, especially first-time buyers. Yet with drops in interest rates starting to attract buyers on the sidelines, marginal price increases are possible for 2025.

CREA Predicts

Currently, the Canadian Real Estate Association (CREA) predicts that “home prices in the Niagara Region are expected to increase by 2% in 2025,” and 6.6% nationally.

New Downpayment Rules Effective in December

As of December 14th, the price cap for an insured mortgage will increase from $1,000,000 to $1,500,000. Instead of an uninsured minimum requirement of 20% or $300,000 on 1.5 M, buyers can take advantage of the following new and insured downpayment requirements:

• 5% down on the first $500,000 or $25,000,
• 10% down on the next $1,000,000 or $100,000,
• For a required minimum downpayment of $125,000. That’s $175,000 less than the $300,000 needed at 20% down.

How This Affects Niagara

The regional benchmark price in Niagara as of October is $638,500, a far cry from the new cap. Yet this change will have a positive effect on buying, as it will apply to all buyers and not just first-time buyers.

• 5% down on the first $500,000 or $25,000,

• 10% down on the remaining amount of $138,500 or $13,850,
• For a minimum downpayment of $38,850. That is $88,650 less than the $127,700 needed at 20% down.

To reiterate, this December 14th ruling applies to all buyers that don’t have 20% down. Yes, there is a mortgage insurance charge added to the mortgage but it gets a buyer into home ownership and on the road to building wealth through equity growth over time.

Changes to Amortization on Insured Mortgages

As of August, first-time buyers have been eligible for 30-year amortizations on insured mortgages for the purchase of a brand new home. As of December 15th,

• First-time home buyers can get an insured 30-year amortization on the purchase of either a new or previously occupied home, and
• All buyers can get a 30-year amortized mortgage on new builds.

Much-Improved Access to Buying

The changes offer much-improved access to buying for first-time buyers and, yes, even 2nd time buyers and beyond.

But there are downsides.

For instance, a 30-year mortgage will lower the monthly payment but will result in more interest being paid over the life of the mortgage. This could be countered if people take advantage of pre-payment privileges offered in their mortgage. Moreover, it opens the door to more buyer competition potentially increasing home prices. The large inventory of home listings will tone down that possibility.