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.
