"In debt even longer": Canadians sound off as feds' 30-year mortgage amortizations come into effect
Starting today, some Canadians can take advantage of longer mortgage amortization as part of the federal government’s attempts to make homeownership more affordable.
Federal Minister of Finance Chrystia Freeland first introduced the plan in April, which allows for 30-year amortization periods on insured mortgages for first-time homebuyers purchasing newly built homes.
It increases the amortization limit for insured mortgages by five years from the current timeline of 25 years to provide younger Canadians with more affordable monthly payments given the current interest rates.
Trudeau says plan will help Canadians
Prime Minister Justin Trudeau also posted about the new program on X.
“If you have a longer-term mortgage, you can make smaller payments to start. That means you can buy your first home sooner,” reads the caption above his video.
“Starting August 1, more first-time homebuyers will have that option.”
“What that’ll do is bring down your monthly payments,” continued Trudeau in the video.
If you have a longer-term mortgage, you can make smaller payments to start. That means you can buy your first home sooner.
Starting August 1, more first-time homebuyers will have that option.pic.twitter.com/x2WNTB1yic
— Justin Trudeau (@JustinTrudeau) July 30, 2024
“Now, it might not take you all 30 years to pay off that home as you advance in your career and make more money. You can pay more per month and pay it off sooner. But it’s giving you the option so you can get into that new home sooner.”
Social media sounds off
Trudeau’s post was met with thousands of comments and reactions.
Some were excited about the government’s plan.
“Great news for first-time buyers! Lower initial payments mean a quicker path to homeownership,” wrote one person.
Great news for first-time buyers! Lower initial payments mean a quicker path to homeownership. đźŹ
— Tomer Rozenberg (@RozenbergTomer) July 30, 2024
Others felt like the plan itself was “fine” but “pointless” because it didn’t address the purchase costs of trying to buy a home.
I guess this is maybe fine, but given it doesn’t address the actual purchase cost comes off at best as kind of pointless? https://t.co/l1WGXkfWSi
— Frelinerit (@drdcdd) July 30, 2024
Some were skeptical that extending the mortgage period will have the impact the government hopes it will.
“This doesn’t make homeownership any cheaper, quite the opposite in fact. You’re making debt more accessible for the tradeoff of longer debt servitude and greater bank profits.”
This doesn’t make homeownership any cheaper, quite the opposite in fact. You’re making debt slightly more accessible, for the tradeoff of longer debt servitude, and greater bank profit.
— Benji in the Beach (@BastardVoltaire) July 30, 2024
“Oh, wonderful. People can be in debt even longer than their lifespan. Great plan.”
That means you can be in debt longer. https://t.co/DZWKi9IBJQ
— Nora Loreto (@NoLore) July 30, 2024
“With a 30-year? That’s way more in interest long term. Horrible for people,” wrote one X user.
With a 30 year? That’s way more in interest long term. Horrible for people. They would pay crazy long term in interest.
— Space Buddy⚡️ (@SpaceBuddyBTC) July 30, 2024
“…Now you’ve just made demand higher,” noted one person.
This is ridiculous and frankly a terrible policy that will make things worse.
We have a supply problem in this country – and now you just made demand higher.
You’ve literally made the problem worse!! https://t.co/bdBtoSSpOo
— Blaine Badiuk (@BlaineBadiuk) July 30, 2024
This new program comes at a time when housing affordability is at the top of all issues concerning Canadians.
According to a new Leger survey, inflation was the most important issue on Canadians’ radar last fall, but in January, housing worries replaced it, and the situation doesn’t seem to be improving anytime soon.
“Current and future economic confidence, both for the country and households, is largely stagnant this wave. While lower inflation and a recent interest rate cut mean concerns in these two areas have continued to abate, housing affordability remains a huge issue,” states the report.
What are your thoughts on the 30-year amortization plan for first-time homebuyers? Let us know in the comments.
With files from Kenneth Chan and Imaan Sheikh
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