Brokers may have just found their campaign issue, with an industry association calling for something that could bring thousands more buyers into the market
The CMBA is advocating for 30-year amortizations for first-time homebuyers in the wake of a Conservative Party proposal to increase RRSP withdrawal limits.
“The Canadian Mortgage Brokers Association urges the implementation of policies to make housing more affordable, in particular, by increasing the amortization for first time high ratio insured home buyers to 30 years from the current 25 years,” CMBA wrote in a release. “This would decrease their monthly mortgage payments and allow them to keep their RRSP intact so it can be invested for growth and make retirement planning more effective for these buyers.”
CMBA argues the existing one million dollar cap on insured mortgages will ensure any impact the change might have would be negligible to the housing market.
And brokers are supporting the suggestion.
“Most Canadians consider home ownership a good thing and that buying a home is good for their financial health,” Geoff Lander of TMG The Mortgage Group told MortgageBrokerNews.ca. “If (the regulators) have agreed to allow 30-year amortizations for certain borrowers, I don’t see why they wouldn’t allow them to help younger people get into the market.”
Those younger potential homebuyers would surely welcome any change that makes it easier for them to purchase a home. Especially considering 91 per cent of Millenials consider owning a home is an important life milestone, according to recent RateSupermarket data.
Further, 79 per cent of those people polled believe Canadian real estate is a safe investment.
That study also found that Gen-Y ers struggle with affordability: 46 per cent say they can’t currently afford to purchase a house in their region.
CMBA’s suggestion was spurred by a Conservative Party proposal to increase RRSP limits to $35,000 from $25,000. The association argues the increased the amount of RRSP funds would not lower borrowing costs due to the fact that they would still have to be paid back within 15 years.
“The increase in RRSP withdrawal limits for first time home buyers will therefore be of limited benefit to many buyers, such as younger buyers and new university graduates, and may favour the more well-heeled or mature first time buyer,” CMBA wrote.