Big Changes in 2024: What They Mean for Homebuyers and the Real Estate Market in 2025
2024 brought some significant changes to the Canadian real estate market that will directly impact homebuyers, especially first-timers in 2025. At Team Apex, we believe it’s important to stay informed and understand how these changes affect your journey to homeownership. Here are the four biggest updates that are shaping the market this year:
1. 30-Year Amortizations for First-Time Buyers
One of the most talked-about changes is the introduction of 30-year amortizations for first-time homebuyers with a down payment under 20%. This extended timeline for repayment reduces monthly mortgage payments, making homeownership more affordable for those entering the market. The 30 year amortization should increase borrowing power by about 10-15% for insured mortgages. The extended amortization period provides much-needed breathing room for buyers managing tight budgets, allowing them to focus on other financial goals while building equity in their homes.
2. Increased Insured Mortgage Cap
In a major shift, the cap on insured mortgages has increased from $1 million to $1.5 million. This adjustment is especially impactful in high-priced markets where home prices often exceed the old $1-million threshold. The rules for down payments remain the same:
- 5% on the first $500,000 of the purchase price
10% on the portion between $500,000 and $1.5 million
Here’s an example to show how this change benefits buyers when purchasing a $1.5-million home under the new rules.
Down Payment Calculation:
5% of the first $500,000 = $25,000
10% of the remaining $1,000,000 = $100,000
Total Down Payment: $125,000
Previously, a buyer would have needed a $300,000 down payment for an uninsured mortgage. This update drastically reduces the barrier to entry for higher-priced homes, making them more accessible to qualified buyers.
3. Five Interest Rate Drops
2024 saw five interest rate cuts, giving buyers a renewed sense of confidence in the market. Lower interest rates reduce the cost of borrowing, leading to smaller monthly payments and increased affordability. These rate drops also stimulate the market, encouraging more activity from both buyers and sellers. If you’ve been considering a move, now is an excellent time to capitalise on these favourable borrowing conditions.
4. Stress Test Removed for Easier Mortgage Renewal Switching
If you’re renewing your mortgage and switching to a new lender, you won’t need to pass the stress test if your mortgage is uninsured (meaning you didn’t need mortgage insurance when you got it). This change makes it easier for homeowners to switch lenders and shop for better rates.
For insured mortgages (which usually apply to people with smaller down payments), the stress test wasn’t needed for switching at renewal before, and that rule was emphasized again in October 2023. So, now both insured and uninsured mortgages can skip the stress test when switching at renewal.
What These Changes Mean for You
These updates represent a significant shift in the Canadian housing market, providing more opportunities for first-time buyers and those seeking homes in higher-priced regions. Here’s how you can take advantage:
Plan for a Larger Budget: The increased insured mortgage cap gives you more flexibility in choosing your dream home.
Leverage the 30-Year Amortization: Lower monthly payments mean you can allocate funds to savings, investments, or other priorities.
Act on Low Interest Rates: Take advantage of reduced borrowing costs to maximize your purchasing power.
Consider Lender Switching: With the stress test removed for mortgage renewals, it’s now easier to shop around for better rates and terms.
At Team Apex, we’re here to help you navigate these changes and make informed decisions. Whether you’re buying your first home, upgrading, or investing, our team of experts is ready to guide you every step of the way.
Let’s make 2025 your year to achieve your real estate goals!
Contact us today to learn more about how these changes can work for you.
Visit our Youtube channel where Jesse and Michelle Chidwick discuss these recent changes.
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As we look ahead to the new year, Dufferin County remains a place of connection, creativity, and growth, continuing to foster memorable experiences for its residents and visitors alike.