Creating Stability in the Canadian Housing Market

Diane Buchanan • October 3, 2016

This morning, Finance Minister Bill Morneau announced new housing measures, changes meant to alleviate risk in Canada’s current housing market. The measures include:

  • Standardizing lending criteria for high- and low-ratio mortgages, including a mortgage stress test
  • Closing tax loopholes for capital gains exemptions on principal residence sales
  • Consulting with industry stakeholders to ensure risk is properly distributed.

It is good to note that these changes will not have any impact on existing mortgage holders, they will be applied going forward.

“Canadians have told us they are concerned about growing household debt and rapidly rising house prices in some of our biggest cities, particularly in markets like Toronto and Vancouver. These concerns have grown over many years, and there are no quick fixes. The federal government plays an important role in ensuring that housing markets are stable and function efficiently. My colleagues and I are committed to continuing to work with provinces and municipalities to address the concerns of middle class families, and to ensure Canada’s housing markets and financial system remain strong, stable and resilient well into the future.”

– Bill Morneau, Minister of Finance

During his press conference, the Finance Minister said repeatedly that he believes the housing market is stable, and that these are simply preventative measures. Over the next week there will be more information available about the specifics of what this announcement means, and that will be shared here, however in the mean time, here is the announcement from the government found on the Department of Finance website.

Backgrounder: Ensuring a Stable Housing Market for All Canadians

Protecting the long-term financial security of Canadians is a cornerstone of the Government of Canada’s efforts to help the middle class and those working hard to join it. Recognizing that for many families, their homes are their most important asset, the Government is taking preventative measures today to ensure a healthy, competitive and stable housing market for all Canadians.

Today’s actions recognize the effect that years of low interest rates and shifting attitudes towards debt and indebtedness have had on the housing market. While the overall Canadian housing market is sound, house prices have risen significantly in some markets, notably Toronto and Vancouver, and some borrowers are taking on high levels of debt. In these circumstances, it is important to ensure that these debt levels are sustainable, that lenders are acting prudently, and that financial stability risks do not arise in the event of increases in interest rates or a housing market downturn.

The Minister of Finance has been actively engaged on the housing file. One of the Government’s first steps since being elected nearly a year ago was to address pockets of risk in the housing market by raising the minimum down payment for homes priced above $500,000. Since then, Department of Finance Canada officials have been further studying the housing market, and have led a working group with municipalities and provinces, as well as federal agencies such as the Office of the Superintendent of Financial Institutions and Canada Mortgage and Housing Corporation.

This in-depth analysis, informed by the productive dialogue with our partners, has informed today’s announcement of three complementary measures designed to reinforce the Canadian housing finance system, to help protect the long-term financial security of borrowers, and to improve tax fairness for Canadian homeowners. Analysis and cooperation are ongoing as the Government continues to carefully monitor the situation.

1. Bringing Consistency to Insured Mortgage Rules

“Mortgage rate stress test” for all insured borrowers:

To help ensure new homeowners can afford their mortgages even when interest rates begin to rise, mortgage insurance rules require in some cases that lenders “stress test” a borrower’s ability to make their mortgage payments at a higher interest rate. Currently, this requirement only applies to a subset of insured mortgages with variable interest rates or fixed interest rates with terms less than five years. Effective October 17, 2016, this requirement will apply to all insured mortgages , including fixed-rate mortgages with terms of five years and more. Homeowners with an existing insured mortgage or those renewing existing insured mortgages are not affected by this measure.

Safer lending:

There are currently different rules in place depending on what proportion of the value of the property is covered by a loan. For example, mortgage insurance criteria for a loan that represents 80 per cent of the value of the property or less ( low loan-to-value ratio mortgages) are not as stringent as for high loan-to-value ratio mortgages (loans that represent more than 80 per cent of the value of the property). This could lead to increased risk for the taxpayers who ultimately back insured mortgages. To help ensure that taxpayer support for mortgage funding is targeted towards safer lending, effective November 30, 2016, mortgages insured by lenders through portfolio insurance and other low loan-to-value ratio mortgage insurance must meet the same loan eligibility criteria as high loan-to-value insured mortgages.

2. Improving Tax Fairness and Closing Loopholes

The Government is committed to tax fairness, and to ensuring that the exemption from capital gains tax on the sale of a principal residence is available only in appropriate cases. Proposed changes to the tax rules would ensure that the principal residence capital gains exemption is not abused, including by non-residents buying and selling a property in the same year. An additional measure would improve compliance and administration of the tax system with respect to dispositions of real estate, including the sale of a principal residence.

3. Managing Risk and Protecting Taxpayers

The Government continuously monitors the housing market and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. As a part of this effort, the Government is looking at whether the distribution of risk in Canada’s housing finance system is balanced, and appropriately reflects all parties’ abilities to share in the management of housing risks.

To this end, the Government will launch a consultation process with market participants this fall on lender risk sharing, a potential policy option that would require mortgage lenders to manage a portion of loan losses on insured mortgages that default. Currently, lenders are able to transfer virtually all of the risk of insured mortgages to mortgage insurers, and indirectly to taxpayers through the government guarantee.

If you have any questions about what any of this means, please don’t hesitate to contact me anytime!

DIANE BUCHANAN
 Mortgage Broker

LET'S TALK

How to Access Your Home Equity Wisely

By Diane Buchanan • December 3, 2025
Need to Free Up Some Cash? Your Home Equity Could Help If you've owned your home for a while, chances are it’s gone up in value. That increase—paired with what you’ve already paid down—is called home equity, and it’s one of the biggest financial advantages of owning property. Still, many Canadians don’t realize they can tap into that equity to improve their financial flexibility, fund major expenses, or support life goals—all without selling their home. Let’s break down what home equity is and how you might be able to use it to your advantage. First, What Is Home Equity? Home equity is the difference between what your home is worth and what you still owe on it. Example: If your home is valued at $700,000 and you owe $200,000 on your mortgage, you have $500,000 in equity . That’s real financial power—and depending on your situation, there are a few smart ways to access it. Option 1: Refinance Your Mortgage A traditional mortgage refinance is one of the most common ways to tap into your home’s equity. If you qualify, you can borrow up to 80% of your home’s appraised value , minus what you still owe. Example: Your home is worth $600,000 You owe $350,000 You can refinance up to $480,000 (80% of $600K) That gives you access to $130,000 in equity You’ll pay off your existing mortgage and take the difference as a lump sum, which you can use however you choose—renovations, investments, debt consolidation, or even a well-earned vacation. Even if your mortgage is fully paid off, you can still refinance and borrow against your home’s value. Option 2: Consider a Reverse Mortgage (Ages 55+) If you're 55 or older, a reverse mortgage could be a flexible way to access tax-free cash from your home—without needing to make monthly payments. You keep full ownership of your home, and the loan only becomes repayable when you sell, move out, or pass away. While you won’t be able to borrow as much as a conventional refinance (the exact amount depends on your age and property value), this option offers freedom and peace of mind—especially for retirees who are equity-rich but cash-flow tight. Reverse mortgage rates are typically a bit higher than traditional mortgages, but you won’t need to pass income or credit checks to qualify. Option 3: Open a Home Equity Line of Credit (HELOC) Think of a HELOC as a reusable credit line backed by your home. You get approved for a set amount, and only pay interest on what you actually use. Need $10,000 for a new roof? Use the line. Don’t need anything for six months? No payments required. HELOCs offer flexibility and low interest rates compared to personal loans or credit cards. But they can be harder to qualify for and typically require strong credit, stable income, and a solid debt ratio. Option 4: Get a Second Mortgage Let’s say you’re mid-term on your current mortgage and breaking it would mean hefty penalties. A second mortgage could be a temporary solution. It allows you to borrow a lump sum against your home’s equity, without touching your existing mortgage. Second mortgages usually come with higher interest rates and shorter terms, so they’re best suited for short-term needs like bridging a gap, paying off urgent debt, or funding a one-time project. So, What’s Right for You? There’s no one-size-fits-all solution. The right option depends on your financial goals, your current mortgage, your credit, and how much equity you have available. We’re here to walk you through your choices and help you find a strategy that works best for your situation. Ready to explore your options? Let’s talk about how your home’s equity could be working harder for you. No pressure, no obligation—just solid advice.

Smart Strategies to Save for Your Down Payment

By Diane Buchanan • November 26, 2025
How to Start Saving for a Down Payment (Without Overhauling Your Life) Let’s face it—saving money isn’t always easy. Life is expensive, and setting aside extra cash takes discipline and a clear plan. Whether your goal is to buy your first home or make a move to something new, building up a down payment is one of the biggest financial hurdles. The good news? You don’t have to do it alone—and it might be simpler than you think. Step 1: Know Your Numbers Before you can start saving, you need to know where you stand. That means getting clear on two things: how much money you bring in and how much of it is going out. Figure out your monthly income. Use your net (after-tax) income, not your gross. If you’re self-employed or your income fluctuates, take an average over the last few months. Don’t forget to include occasional income like tax returns, bonuses, or government benefits. Track your spending. Go through your last 2–3 months of bank and credit card statements. List out your regular bills (rent, phone, groceries), then your extras (dining out, subscriptions, impulse buys). You might be surprised where your money’s going. This part isn’t always fun—but it’s empowering. You can’t change what you don’t see. Step 2: Create a Plan That Works for You Once you have the full picture, it’s time to make a plan. The basic formula for saving is simple: Spend less than you earn. Save the difference. But in real life, it’s more about small adjustments than major sacrifices. Cut what doesn’t matter. Cancel unused subscriptions or set a dining-out limit. Automate your savings. Set up a separate “down payment” account and auto-transfer money on payday—even if it’s just $50. Find ways to boost your income. Can you pick up a side job, sell unused stuff, or ask for a raise? Consistency matters more than big chunks. Start small and build momentum. Step 3: Think Bigger Than Just Saving A lot of people assume saving for a down payment is the first—and only—step toward buying a home. But there’s more to it. When you apply for a mortgage, lenders look at: Your income Your debt Your credit score Your down payment That means even while you’re saving, you can (and should) be doing things like: Building your credit score Paying down high-interest debt Gathering documents for pre-approval That’s where we come in. Step 4: Get Advice Early Saving up for a home doesn’t have to be a solo mission. In fact, talking to a mortgage professional early in the process can help you avoid missteps and reach your goal faster. We can: Help you calculate how much you actually need to save Offer tips to strengthen your application while you save Explore alternate down payment options (like gifts or programs for first-time buyers) Build a step-by-step plan to get you mortgage-ready Ready to get serious about buying a home? We’d love to help you build a plan that fits your life—and your goals. Reach out anytime for a no-pressure conversation.