Things are getting easier for First Time Home Buyers (FTHB) to qualify and have more flexibility with payments when getting into the market.  Effective Dec. 15, 2024, FTHB can now purchase a home up to $1.5M with an insured mortgage.  This was previously capped at $1M and as home values in the Vancouver market have continued to go up drastically over the past 5 years, this has put a lot of properties out of reach for buyers that want to get into a detached home.  This now allows buyers to have less than 20% down payment.  Previous rules required home buyers to have 20% down or more when purchasing over $1M.

Another change effective next week is that FTHB can now get a 30 year amortization as well when taking an insured mortgage.  Previously the longest amortization buyers could get with an insured mortgage was 25 years.  This helps with affordability as well as qualification.  This change is also available to those purchasing new construction properties as their principal residence whether you are a first time buyer or not.  You can now take an insured mortgage up to $1.5M on a newly constructed home and get the 30 year amortization.

We have 3 insurers in Canada, CMHC, Sagen and Canada Guaranty (CG). Information is starting to come out from all banks and insurers on these policy changes.  Here’s a snapshot of the changes:

30yr amortizations:

• All buyers of newly built properties can have a 30yr amortization on an insured mortgage
• First time home buyers can take advantage of a 30yr amortization on an insured mortgage
• Only one applicant on the file needs to be a FTHB to qualify for a 30yr amortization
• What defines a FTHB? Read more HERE:

Down payment requirements are the same for insured mortgages, it is calculated as:

5% of the first $500,000, then 10% on the remaining amount.  Example on a purchase price of $1.1M

$25,000 (up to $500,000)

$60,000 (remaining $600,000)

$85,000 Minimum Down Payment

Total Minimum Down Payment on a purchase price of $1.1M is $85,000

For any purchase price over $1.5M, the minimum down payment is 20% of the purchase price.

For more information or to discuss a specific file, please reach out to our team at support@primexmortgages.com or 604-552-6190

Good news this morning for our Variable Rate Mortgage holders and anyone with a loan attached to the Prime rate.  Today it was cut by .50% effective tomorrow which in turn will lower mortgage and loan payments.  For those with static payments, such as mortgages with TD, RBC and others, you will now be paying more towards the principal and less to interest.  Below is the news release from DLC’s own economist, Dr. Sherry Cooper.

If you want help or advice for anything mortgage related or how these rate cuts affect you, please connect with us at the office and we would love to chat more with you about it.

The BoC slashed the overnight rate by 50 bps this morning, bringing the policy rate down to 3.25%. The market had priced in nearly 90% odds of a 50 bp move, where consensus coalesced. The combined slower-than-expected GDP growth and a sharp rise in the Canadian unemployment rate to 6.8% triggered the Bank’s second consecutive jumbo rate cut. Today’s move will take the prime rate down 50 bps to 5.45% effective tomorrow, reducing floating rate mortgage loan rates by a half point, easing the cost of borrowing and reducing the monthly payment increase for renewals. This should spark housing activity, which accelerated in October and November.

The policy rate is now at the top of the estimated neutral rate range, 2.25% to 3.25%, with more moderate rate cuts continuing into next year. However, monetary policy remains restrictive, as the 3.25% policy rate is still 125 basis points above inflation, which has declined to roughly 2%, the Bank’s inflation target.

Economists have suggested that the tone of the central bank’s press release is more hawkish than before, unsurprising following two consecutive jumbo rate cuts. The Bank continues to say that its future decisions are data-dependent and will be impacted by policy measures taken by the government. In particular, the Bank highlighted the coming GST cuts, dispersal of bonus checks and the significant reduction in immigration. These developments have offsetting implications for inflation.

Governor Macklem signaled that he anticipated “a more gradual approach to monetary policy” in his press conference. We are forecasting 25 bp rate cuts through at least the first half of next year. That would take the overnight rate down to 2.5% by early June, a huge boost to housing that will likely enjoy a strong spring season.

Bottom Line

Today’s action is great news for the Canadian economy and housing activity. The central bank said that planned immigration target reductions are the “most significant” factor for the 2025 outlook and suggest below-forecast GDP growth. However, the “effects on inflation will likely be more muted, given that lower immigration dampens both demand and supply.” Lower immigration is one of the “factors” that caused the BoC to cut 50 bps and not 25, Macklem said.

During this cycle, the Bank of Canada has been the most aggressive central bank in cutting rates. Even so, the Canadian dollar edged higher following the Bank’s announcement, likely because markets now expect a more moderate pace of rate reduction next year.