The federal government is raising the cap on insured mortgages to $1.5 million and expanding access to extended mortgage amortization periods, a bid to tackle a housing affordability crisis that’s put homeownership out of reach of scores of Canadians.

Finance minister Chrystia Freeland said on Monday that the government was increasing the limit on insured mortgages from its previous level of $1 million and allowing homebuyers to take out a 30-year loan if they’re buying for the first time or purchasing a newly built house.

The government had previously indicated that a 30-year amortization would only be available to first-time buyers who were purchasing a newly built home.

Freeland’s move to hike the insured cap addresses a longstanding mortgage industry grievance – namely, that the previous limit was freezing some buyers out of being able to purchase a home.

It means insurance, which is required for home purchases with a downpayment of less than 20%, is now available to Canadians buying a property for up to $1.5 million.

That could prove significant in markets like Toronto and Vancouver, where average prices sit well over the $1 million mark – although eyewatering price appreciation remains a major hurdle for many prospective buyers.

Freeland said the measures would “put the dream of homeownership in reach for more young Canadians,” and first-time buyers would be “in a stronger position” after the adjustments, also highlighting the prospect of an uptick in homebuilding as a result.

Both changes are scheduled to come into effect on December 15.

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