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Can New Mortgage Rules Boost Housing Costs in British Columbia?

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Want to know how recent rate cuts and new mortgage rules are going to affect your property buying dreams? The federal government’s recent move to raise the insured mortgage threshold is intended to make homeownership more accessible to Canadians who are planning to buy a home but have a low budget or limited finances. But a significant ratio of Canadians feels that the new ratio may have the unexpected consequence of raising the housing prices to a new high.

Last month, Finance Minister Chrystia Freeland said that the government would raise the insured mortgage qualification cutoff to $1.5 million, boosting the maximum price at which Canadians can purchase a home with a down payment of less than 20%.

The government pointed it as one of the powerful mortgage reforms in years or even decades, although the critics have pointed to the possibility of rising housing prices and increasing real estate competition as a consequence of the recent reforms.

Will Mortgage Changes Bring A Rush Of New Homebuyers?

The minimum down payment as well as the high monthly costs of mortgage service is usually regarded as two of the most common hurdles to homeownership for prospective home buyers, especially if they are buying a property for the first time.

In addition to the increased insured mortgage cap, the government expanded access to 30-year amortization periods, allowing first-time purchasers and any Canadian purchasing a newly built property to get access to a payback period greater than the previous maximum amortization of 25 years.

While this may be a game changer for some buyers, some mortgage experts believe that the impact of the insured mortgage restriction will be limited. To qualify for a mortgage, a homebuyer must have a household income of $300,000 and no debt.

Mortgage Trends Show Early Signs Of Market Price Rise

The three consecutive rate cuts since the beginning of the summer are gradually shifting homebuyers’ attitude toward owning a property.

Lower interest rates got the wheels turning a little faster in the national housing market last month, Royal Bank of Canada (RBC) associate chief economist Robert Hogue noted in a recent study, as sales activity began to heat up and this is only expected to rise in the coming months as the Bank of Canada cuts rates further.

Get Through The Mortgage Maze With Sandhu & Sran

At Sandhu & Sran Mortgages, our experienced and award-winning mortgage brokers can help you understand the ins and outs of the latest mortgage rules in British Columbia. We know how long you have been waiting to own a home and are here to help you finalize the best residential mortgage deal in Abbotsford and Surrey.

Want to apply a mortgage? Talk to our Abbotsford mortgage brokers today and get started with your loan application. For more details, give us a call today.

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