As we roll into the new year, I want to highlight some of the mortgage rule changes that have happened over the last month that may affect your buying or selling decisions for 2025.
Canada’s housing market continues to evolve, with new mortgage rule changes designed to improve affordability and provide relief to homeowners and prospective buyers. These updates, along with current mortgage rates, offer critical insights for anyone looking to enter the housing market or refinance an existing mortgage. Below, we break down the recent changes and provide an overview of the latest rate offerings from some of Canada’s top banks.
Key Changes to Mortgage Rules
1. Increased Insured Mortgage Cap
Effective December 15, 2024, the Canadian government raised the cap for insured mortgages from $1 million to $1.5 million. This change allows more Canadians to qualify for a mortgage with a down payment below 20%, a move aimed at increasing access to homeownership in a challenging market.
2. Extended Amortization Periods
To reduce the financial burden of monthly payments, first-time homebuyers and purchasers of new builds can now opt for 30-year amortizations. This extension provides more flexibility, making it easier for Canadians to afford homes without overstretching their budgets.
3. Easier Lender Switching
As of November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) eliminated the requirement for borrowers to meet the Minimum Qualifying Rate when switching lenders for an existing mortgage. This adjustment simplifies the process for homeowners to find better rates and terms without undergoing the rigorous stress test again.
These changes reflect the government’s commitment to tackling affordability challenges while supporting a more dynamic and accessible housing market.
Current Mortgage Rates
At the time of writing, here are the mortgage rates posted by CIBC, RBC, and TD for new mortgages with a 25-year amortization or less:
5-Year Fixed Rates:
- CIBC: 4.89%
- RBC: 4.89%
- TD: 5.09%
5-Year Variable Rates:
- CIBC: 4.95%
- RBC: 4.95%
- TD: 5.19%
What Do These Changes and Rates Mean for You?
The combination of increased insured mortgage caps and extended amortization periods can make it more feasible for first-time buyers to enter the market. Meanwhile, the relaxed lender-switching requirements empower current homeowners to seek better deals without navigating the stress test.
When it comes to mortgage rates, fixed rates remain a popular choice for those seeking stability, while variable rates may appeal to those willing to take on more risk for potential savings. However, your specific needs, financial situation, and risk tolerance will ultimately dictate the best option for you.
A Note on Mortgage Rates
The rates mentioned above are based on data posted on the respective banks’ websites at the time of writing. For rates tailored to your unique circumstances, we recommend contacting your bank or a licensed mortgage broker. Mortgage brokers often have access to a wider range of lenders and can frequently secure better rates than what is posted by the major banks. They can provide personalized advice and help you find the best terms available for your situation.
Understanding these updates and monitoring rates closely can position you to make informed decisions, whether you’re buying your first home, upgrading to a larger property, or refinancing your current mortgage. With government initiatives and competitive rates, the path to homeownership may be more accessible than you think.
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