New Mortgage Rules for 2024 & 2025

A list of recent mortgage rule changes.

These changes have either happened or are scheduled to take effect.

August 1, 2024
Extend to 30-year amortization for first-time buyers of new-builds

The federal government allowed a 30-year extension for first-time buyers only for insured new-build mortgage purchases.

August 1, 2024
Premium surcharge added to first-timer 30-year extension rule

The premium surcharge added by CMHC is in response to the new 30-year extension rule, which takes into consideration the capital impact of these mortgage-length extensions while also supporting CMHC’s mandate to promote housing affordability.

November 21, 2024
Removal of stress test for uninsured renewal switches

For uninsured mortgage switches at renewal, OSFI removes the federally-required mortgage stress for qualification, allowing more homeowners to find a better deal. The stress-test requirement isn’t required for insured switches (a rule that was re-highlighted in October 2023).

December 15, 2024
Insured mortgage changes

These rules were introduced to help more home buyers enter the real estate market and seek to help Canadians address the current housing market realities of higher home prices and interest rates.

• An increase in the home-price cap from $1M to $1.5M for insured mortgages (for primary and secondary home purchases, not investor purchases) will allow less than a 20% down payment in more expensive markets and access to lower insured mortgage rates
• All first-time and all new-build buyers can extend an insured mortgage to 30 years from the standard 25-year amortization, which will help lower mortgage payments and improve stress-test qualification. This rule expands on the 30-year insured amortization exception rolled out on August 1 (above).
• A 30-year insured mortgage comes with an added insurance premium.

January 15, 2025
Insured refinances for secondary suites

Insured refinances haven’t been available to Canadian homeowners since 2016 (originally removed to discourage the ability to take on more mortgage debt). This new allowance aims to encourage on-the-property density, ideally helping to alleviate the housing and rental supply crunch while offering a potential added (rental) income source for budget-challenged owners.

• Eligible homeowners will be able to access an insured refinance for up to 90% of their ‘improved property’ value (capped at a $2M home value) for construction funds.
• This product can be extended to a 30-year amortization (an additional insurance premium will apply)

Quarter 1 of 2025
LTI cap on uninsured mortgages.

OSFI announced in March, 2024, that in Q1 of 2025, banks will have a cap placed on the number of new uninsured mortgages in their portfolio that are more than 4.5 times a borrower’s annual gross income (the cap will differ for each lender).

This new rule could impact first-time home buyers the most, shrinking how much home they can buy based on their income (in addition to the TDS ratios already in place) when getting a mortgage approval through a traditional lender.

As rates fall (when and if they do), this regulation has the capacity to reduce single-property homeowners in Canada and favour higher-income earners and property investors, especially in higher-priced markets such as Vancouver and Toronto. (Renewals and refinances aren’t included in the lender LTI cap.

Mortgage Rule Proposals

No active rule proposals.

How often are rule changes proposed?

The federal government tables potential budget changes bi-annually. Read through their latest housing measure proposals.

OSFI reviews mortgage rules at least once per year (usually in December), and may propose changes to address current issues or provide forward guidance.

Once it consults with the industry, successful proposals may be formalized, which can take weeks to months to become official (depending on how easy it is for lenders to implement the changes).

Pushed around by outside pressure?

The federal government may enact certain mortgage rule changes as part of an election platform or recent promise, though doing so without industry consultation (i.e. a move to secure more votes or public favour) can lead to detrimental economic impact.

The banking governance body, OSFI, typically doesn’t respond to political pressure — revising or proposing rules based on how it perceives the conditions, needs, or security of the banking industry.

However, OSFI’s regulations aren’t always popular with all players in the government or mortgage industry. This ‘resistance’ can lead some experts (or politicians) to think that OSFI may implement or reverse changes based on the feedback (it rarely does).

A good example of resisting politics can be seen in OSFI’s ‘sudden’ mortgage rule change (announced September 2024) to drop the required stress test on uninsured renewal switches. The mortgage industry (and the federal government) had been calling for this change for years, and more intensely since prime rate-drops were finally anticipated. But far from succumbing to outside pressure, this rule change instead was based on forward guidance for the economic climate and declining rates.

Reference: https://www.truenorthmortgage.ca/blog/will-mortgage-rules-change-canada