Impact of New Mortgage Policies on Housing Affordability

This technical report discusses the implications of recent federal housing policies on affordability for Canadian homebuyers, particularly in light of changes effective December 15, 2024. The report outlines how the introduction of 30-year amortizations for insured mortgages and an increase in the price cap for insured mortgages from $1 million to $1.5 million are expected to affect the housing market. It details the anticipated mixed effects of these policies on affordability, noting that while lower monthly payments may be achieved through extended amortization, the overall impact on affordability could be limited due to rising home prices and the costs associated with mortgage insurance. The report also highlights the challenges faced by the construction industry, including labor shortages and high material costs, which may hinder the long-term improvement of housing supply and affordability. The Desjardins Affordability Index is referenced to illustrate current trends in housing affordability across various provinces, emphasizing the ongoing challenges for young and first-time homebuyers in the market.