By Paul Vieira
OTTAWA--Canadian Finance Minister Chrystia Freeland revealed on Thursday changes to mortgage-finance and other housing rules aimed at improving affordability for younger people.
She said in Toronto that first-time homebuyers would be eligible for a 30-year amortization on the mortgage, so long as the downpayment is less than 20% of the home's value and the residence is newly built. The current limit on amortizations for these types of mortgages is 25 years. This is to take effect next in August.
Meanwhile, Freeland said homebuyers would be allowed to withdraw more cash to buy their homes from their registered retirement savings, or the Canadian equivalent of a 401(k). Freeland said first-time homebuyers can now take out up to 60,000 Canadian dollars, or the equivalent of about $44,000, up from the current C$35,000 level. Borrowers will also have longer to repay this money back into the tax-deferred account, she said. This goes into effect on April 16, or the same day Freeland reveals her 2024 budget plan to parliament.
Freeland and the Prime Minister, Justin Trudeau, have preemptively announced about C$20 billion of spending measures ahead of the budget, which they say is focused on ensuring generational fairness. Freeland and Trudeau have said the economic conditions appear stacked against young Canadians, and they are working to help this group.
The Trudeau-led Liberal government trails the Conservative Party in most public-opinion polls, with new research issued Thursday by Ottawa-based Abacus Data indicating the Tories hold a 20-percentage-point lead over the Liberals, 44% to 24%.
Weighing on the Liberal government is unhappiness among Canadians on affordability issues, most notably housing. Bank of Canada indicators suggest housing affordability, judged by the amount of after-tax income required to cover shelter costs, is at its worst level in over 40 years.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
04-11-24 1202ET
