Canadian Govt Considers Move To Load Households With More Real Estate Debt
The Government of Canada is mulling over how to increase household debt. The Ministry of Finance is considering extending the maximum amortization for insured mortgages. The move would lower payments relative to 25 year amortizations, in exchange for paying more interest. The move helps in the short-term, but can cost households a lot more. In addition, it’s also likely to drive prices even higher during the next housing cycle.
The Federal government is considering extending the maximum amortization schedule on mortgages. Amortization is the length of time a borrower agrees to pay off their loan. Insured mortgages are limited to a 25 year term, meaning their home will be paid off in 25 years. It’s a very long time, but it’s a cap that we’ve become fairly accustomed to in Canada, over the past few decades.
The Home Builders Association claims that could change very soon. Canada is considering allowing first-time buyers the ability to amortize for 30 years.