Trudeau May Extend Amortization Period Limit — But Will It Make Housing More Affordable?

Canadian Prime Minister Justin Trudeau has hinted that the upcoming federal budget on April 16th will include changes to the mortgage sector. While Trudeau did not provide specifics, people are speculating there would be news to announce regarding mortgages in the coming days.

Currently, Canada limits insured mortgages to a maximum amortization period of 25 years. At a news conference on Friday, Trudeau was asked whether the government would extend this limit to 30 years or more, which could ease monthly payments and help buyers struggling to enter the pricey Canadian housing market. 

Trudeau did not directly address extending the amortization period, but stated: “On mortgages we will have more to say between now and the budget date on April 16, and perhaps we will save it for April 16.” 

Over the past two weeks, the Trudeau government has been making a series of pre-budget announcements focused on their plans to improve housing affordability, particularly in the rental market. Last week, Trudeau announced a $1.5 billion Rental Protection Fund that he said aims to “preserve” affordable rental housing.

Related: Canada’s Housing Market Outlook: Prices to Match 2022 Peaks, Reach New Highs by 2026

Canada previously allowed insured mortgages with amortization periods up to 40 years, but reversed that policy after the 2008 global financial crisis. The current 25-year limit has been in place since 2012 and applies to mortgages requiring government-backed insurance, which is mandatory for buyers with less than a 20% down payment.

Some experts have been advocating for the government to loosen mortgage rules, especially for younger, first-time homebuyers, to provide better access to Canada’s hot housing market. But many are also questioning whether extending amortization would actually impact affordability in the long run.

SmallCapSteve also reminded us that Canadian politicians love playing landlord.

In June last year, The Maple released a comprehensive database of landlord Members of Parliament (MPs) in the country and what they found was shocking but not at all surprising. 

The conflict of interest is so glaring that even a Grade 8 student knew it was a problem that then-housing minister Ahmed Hussen — along with other government officials — were allowed to have personal investments in the real estate market.

Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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