Lower rates and increased amortizations—will this be the solution first-time buyers need to get a set of keys to their first home?
As your local Kamloops mortgage broker, I have experienced the frustration of first-time home buyers as they try to navigate the real estate market. Rising rates since 2022 squeezed affordability and pushed many hopeful buyers to the sidelines. With the recent Bank of Canada(Bank) cuts and a drop in fixed mortgage rates, it appears that first-time home buyers have a glimmer of hope.
The Bank has cut its prime lending rate three times since June, and economists are calling for further cuts. With the U.S. Federal Reserve cutting its rate by half a percentage on September 18, 2024, it appears those calling for further cuts may be on to something.
The Canadian Federal Government expanded on its 30-year amortization rule by increasing its access for first-time home buyers. Effective December 15, 2024, it will no longer be solely for newly constructed homes. The increase in amortization gives a buyer just entering the market two options: an increase in purchase price or a decrease in monthly payment. For some buyers who have been priced out of the market, this could open the door to their first home or keep their monthly payments down.
In addition, the federal government hiked its cap on insured mortgages to $1.5 million, allowing buyers to put forward a down payment of under 20% on purchases up to that value.
British Columbia’s most populous city requires a household income of $227,000 to purchase the average property, compared with an average actual income of $115,790. You can understand why so many buyers feel frustrated, and it should be noted that while these changes do help, many buyers are still going to struggle.
Are you a first-time home buyer trying to navigate the process of buying your first home? Let’s talk.
