'Smoke and mirrors:' Calgarians underwhelmed by national mortgage change

A change to Canada's mortgages aimed at spurring development and driving down payments is falling flat in some Calgary real estate circles. 

Deputy Prime Minister and Finance Minister Chrystia Freeland announced Thursday the 2024 federal budget will include extending the mortgage amortization limit on insured mortgages from 25 to 30 years. 

But only first-time buyers purchasing newly built homes are eligible for the longer mortgage periods.

"It's going to impact so few people that it's basically all smoke and mirrors," said Jim Sparrow, a long-time, recently retired Calgary realtor. 

"It sounds great, but when you think about it, there just aren't that many people that can put $50,000 down and buy a brand new home if they're a first-time buyer."

In March, Calgary's residential benchmark price was up 10.9 per cent from the previous year to $597,600 according to the Calgary Real Estate Board. 

Housing inventory levels plummeted nearly 22 per cent in that same time, the CREB data also shows.

Jill Muirhead is finishing the paperwork and approvals for her first home in south Calgary.

It was built in 1971. 

"The new builds honestly weren't even in the price range," she said.

"When we first started looking, we're like, 'Oh, our finances were pretty good' and we were like, 'Oh, we have a lot of options.'"

"But we saw as the weeks passed, there weren't many houses on the market and then the ones that were in our price range were … becoming more and more expensive."

Muirhead said she eventually found a home she was happy with. 

Calgary real estate agent Brandy Rigel says about half of her clients are first-time buyers, and most have a tough time house hunting. 

"Not a lot of them are buying new builds and to be honest, right now there isn't a ton of new builds available," she said. 

"When I would have first started, first-time home buyers in the city of Calgary would have been looking for single-family detached homes …. Fast forward to where we are today and a lot of first-time home buyers, unfortunately, are having to purchase something that they never thought of originally."

The Canada Mortgage and Housing Corporation's latest supply report shows more units are going up in Calgary. Housing completions increased by 11 per cent in 2023, with 1,470 new units added to the market. 

Still, the supply report says the inventory of completed and unsold units was down more than 50 per cent last year from 2019. 

Mortgage broker Ron Butler says extending mortgage amortizations for new buyers purchasing new builds will have more impact on housing markets with lower prices. 

But on the whole, he's underwhelmed by the change. 

"It's extremely restrictive," he said. "We definitely should have gone 30 years for all first-time home buyers."

"We've had a 25-year limit on the amortization … for 20 years now. How much has the price of houses gone up in 20 years?"

The federal government also announced on Thursday that the amount first-time home buyers can withdraw from their RRSPs to make a down payment on their first home will rise from a maximum of $35,000 to $60,000. 

The government said the change reflects the fact that down payments are much larger than they used to be.

People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025 are also getting more time to begin repayment — up to five years in total rather than two.

However, Butler said that's "not even close" to enough relief for young people struggling to save money.