In today’s housing climate, many prospective homeowners face challenges in achieving homeownership. This is especially true for Millennial and Gen Z first-time homeowners. These challenges include high mortgage payment costs and housing prices, as well as a supply shortage for both buyers and renters.

To help fight this, the Bank of Canada has implemented changes over the past year to make homeownership more attainable for all. The January 29, 2025 interest rate announcement set forth a reduction of 25 basis points, lowering interest rates from 5% to 3%. Now, on March 12, 2025, the Bank of Canada announced a further reduction from 3% to 2.75% and the deposit rate at 2.70%. This is helpful to Canadians as it will lower the cost of having mortgages, loans, and lines of credit.

The Bank of Canada believes these reforms will have a positive impact both on potential buyers and on current homeowners. These new changes also aim at helping the housing supply shortage by increasing new home construction, adding rental units, and assisting the Canadian government’s plan to build nearly 4 million homes by 2031. The new interest rates will also help more Canadians qualify for a mortgage, making buying a home more accessible.

Mortgage Rule Changes and Who They Will Affect 

1. Mortgage amortization increased for new construction homes: The government is allowing Canadians buying a new build to have 30-year mortgage amortizations, increased from the standard 25-year amortization period. 
2. Insured mortgage price cap increases from $1 million to $1.5 million: This change better reflects and suits the current housing market. 
3. Insured mortgage refinancing becomes easier to add unit(s) to an existing home: To make it easier for homeowners to add 1-3 rental spaces to their homes as a part of the government’s plan to create more housing spaces.