It was billed by the Trudeau government as part of the “boldest mortgage reforms in decades,” an effort to open access to homeownership for scores of younger Canadians locked out of the market.
Nearly a year after being introduced, that measure – access to 30-year amortizations for first-time homebuyers – haven’t exactly transformed the mortgage landscape.
But it’s been given a cautious thumbs-up by brokers during that period for improving buyers’ prospects of qualifying for a mortgage, even if it ultimately stretches out the mortgage and means they’re paying back over a longer period.
Jason Zuckerman, a Montreal-based mortgage broker with Groupe Orbis, spelled out the dilemma facing many first-time buyers as they weigh up taking out a 30-year term.
“On one hand, it’s not a good thing because it pushes people to take on more debt,” he told Canadian Mortgage Professional, “but on the flip side, it’s a good thing in the sense that it helps increase their borrowing capacity.
“Before this new regulation, only people who could put down 20% could amortize their mortgage for up to 30 years. Now it evens things out more to help younger people buy their first home. And since salaries have not kept up with the price of homes, many young people feel priced out of the market.”
Gaining that access to homeownership puts younger people in a position to build equity for the future, even if it will ultimately take longer to build that equity because they’ll be paying more interest over the 30-year period.
That means they’ll be more reliant on the appreciation of their current property value if they want to purchase a more expensive home at a later stage – and while banks can offer prepayment options to help customers lower their amortization, not all borrowers take advantage of them.
A strong option – but not always the right one
For brokers, the answer to the question of whether a borrower should stretch into a 30-year amortization is a multi-layered one.
Zuckerman said much depends on each client’s long-term goals for their home and the mortgage strategy they’re comfortable with.
“When clients ask me ‘Should I take 25 or 30 years?’ I always tell them: ‘Is it your goal to pay down your home as quickly as possible, while having a higher monthly payment? Or is it your goal to forego paying down your mortgage quickly, for the benefit of having an extra few hundred dollars of breathing room at the end of the month?’” he said.
“Overall, it depends on the client’s personal situation. If it’s two young people, I’m usually encouraging them to do the 30-year amortization, just because you don’t want them to be stuck at the end of the month trying to make ends meet. And if they do have extra money at the end of the month, they can always prepay it to the bank to lower their mortgage balance/amortization.”
Plenty of work still needed to ease affordability challenges
That expanded amortization also made an immediate impact in Toronto, one of Canada’s priciest real estate markets.
At the end of last year, Toronto broker Matthew O’Neil told CMP the option had been a welcome change for borrowers.
“A 30-year amortization on a [$1.3 million] mortgage might drop your payment $400, $500, $600 a month,” he said. “It’s pretty significant, and then [buyers] are also getting out of a two-bed, two-bath condo, which would historically be $650 to $700 in condo fees.”
But improving access to homeownership for Canadians will take more than adjusted mortgage rules – and while the federal government under Prime Minister Carney has unveiled a slate of new housing proposals including plans to turbocharge the pace of home construction, it could prove easier said than done.
A recent Parliamentary Budget Office (PBO) report showed that the national gap between average house prices and what a typical household can afford narrowed between September 2023 and August 2025 – but big challenges persist in the priciest markets.
In Toronto, Vancouver, and Victoria, according to interim officer Jason Jacques, “households… are still stretching their finances to buy a home.”
CMP
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