In recent weeks, the mortgage industry has seen significant changes beyond just the drop in interest rates. As always, Martin Group is here to help you navigate these updates and how they impact you.
1. Bank of Canada Interest Rate Cut
As of today, the Bank of Canada has reduced the overnight lending rate to 3.75%. This is huge news for anyone with a variable mortgage rate or those looking to qualify for one. A lower rate means lower monthly payments for many homeowners.
2. Minimum Down Payment Reduction
In a groundbreaking move, the government has announced that starting December 15, 2024, the minimum down payment on homes priced up to $1.5 million will drop from 20% to 10%. This is a game-changer. Many buyers previously found themselves stuck at the $1 million mark—not because they couldn't handle the mortgage payments, but because they couldn’t bridge the gap in the down payment requirement. Now, with just 10% down, more buyers will enter the market for higher-priced, entry-level detached homes, potentially driving up prices.
3. 30-Year Amortization for First-Time Buyers
For first-time homebuyers, there’s more good news. As long as there’s at least one first-time homebuyer on the title, you can now qualify for a 30-year amortization, up from the previous 25 years. This change either lowers your monthly payments or helps you qualify for a higher-priced home—offering greater flexibility and affordability.
4. Removal of the Stress Test for Existing Homeowners
Finally, existing homeowners can now switch lenders without the stress test. Many homeowners were previously stuck with their lender because they couldn’t pass the stress test when trying to move their mortgage to another institution. Now, if you’re a current homeowner, you can requalify for a new mortgage elsewhere without going through the stress test again.
Frequently Asked Questions
What did the Bank of Canada cut the rate to?
3.75% at the time of this announcement — significant relief for anyone holding a variable rate mortgage or trying to qualify for one, since lower rates mean lower monthly payments.
What changed with minimum down payments?
From December 15, 2024, the minimum down payment on homes up to $1.5 million dropped from 20% to 10%. Many buyers had been stuck at the $1 million mark not because of the payments but because of the down payment gap.
What effect will the down payment change have on prices?
More buyers entering the market for higher-priced entry-level detached homes, which puts upward pressure on that segment. If you are shopping in that band, expect more competition.
Who qualifies for a 30-year amortization?
Any purchase with at least one first-time homebuyer on title, up from the previous 25-year maximum. It either lowers your monthly payment or lets you qualify for a higher-priced home.
Can existing homeowners switch lenders now?
Yes. Existing homeowners can switch lenders without passing the stress test again, which frees homeowners who were previously locked in with their current institution.
How do these changes apply to my situation?
That depends on your price point, your down payment and whether anyone on title is a first-time buyer. Call Martin Group at (905) 338-2083 and we will connect you with a mortgage professional to run the numbers.
