Deputy Prime Minister and Finance Minister Chrystia Freeland announced a series of measures aimed at improving housing affordability in Canada.
The changes include increasing the amount first-time home buyers can withdraw from their RRSPs for a down payment, introducing the Tax-Free First Home Savings Account, extending the RRSP repayment period, and changing the mortgage repayment amortization schedule.
The Tax-Free First Home Savings Account program allows Canadians to save up to $8,000 per year toward a home, with a maximum lifetime contribution limit of $40,000. Contributions to the accounts provide people with tax rebates, and growth in the accounts is not taxed. Freeland also announced that the time allowed for Canadians to start repaying their RRSP contributions once they have made a withdrawal to pay for the deposit on a home will be more than doubled. Additionally, first-time home buyers with insured mortgages who purchase a newly-built home will get 30 years to pay that mortgage back.
Under the Canadian Mortgage Charter, lenders will now have to contact borrowers "up to 24 months in advance of a homeowner's mortgage renewal" to discuss options. The charter also requires that lenders provide temporary extensions on the amortization period for mortgage holders who were facing financial difficulties.
The parliamentary budget officer released a report saying Canada will need to build 1.3 million additional homes by 2030 to eliminate the country's housing gap. The report does not take into account recent federal efforts to bolster housing supply or Ottawa's new cap on temporary residents.
The Liberal government has made a string of housing announcements ahead of the federal budget, largely aimed at increasing housing supply. The proposed measures include billions of dollars in low-cost loans to spur more rental construction, as well as infrastructure funding for provinces and municipalities.
The Canadian Home Builders' Association issued a statement welcoming the 30-year amortization period announced by Freeland, saying the measure will "go a long way" toward turning the market around. The Conservatives did not directly address the new measures announced by Freeland Thursday, but issued a statement criticizing the government's housing policies.
Source: https://www.cbc.ca/news/politics/freeland-housing-affordability-measures-1.7170671