In Ottawa, the Minister of Finance maintains that these measures aim to stimulate supply through the construction of new housing. But when is it really?
Certainly, the expansion of eligibility for 30-year mortgages will have the impact of increasing the borrowing capacity of buyers. Then, of reducing the monthly payments of owners, which is desirable given the high inflation of recent years.
But these measures could have the opposite effect… Indeed, an increase in borrowing capacity will stimulate demand. In the absence of measures to increase supply, house prices could increase.
Additionally, paying off a mortgage over a longer period of time will increase the total interest paid over the life of the mortgage. That said, remember that the amortization is the maximum term of a mortgage. However, you can reduce the term of your mortgage by accelerating the repayment (or reducing the amortization when you renew your mortgage). In other words, you can’t make a mortgage longer, but you can make it shorter by accelerating the repayment.
Finally, the key rate cuts of the last few months (and those to come) could also have an impact on house prices. In this context, measures on the housing supply would perhaps have been preferable.
