The federal government’s recent decision to extend mortgage amortizations to 30 years for first-time homebuyers aims to make homeownership more accessible, but experts suggest this will do little to alleviate London’s tight rental market. With vacancy rates at a mere 1.7% and rental prices continuing to rise, industry analysts predict minimal impact on the overall rental supply.
While the mortgage expansion now includes first-time buyers of any home type, along with those purchasing newly built homes, this change doesn’t address the root issue of housing affordability. Even with lower monthly payments, housing prices in London remain significantly high, making homeownership difficult for many.
Diana Mok, associate professor of real estate at the University of Guelph, emphasizes that the new mortgage rules only tackle one aspect of the problem: cash flow. “The mortgage with a longer amortization is only addressing one side of the issue,” she says. “But it does nothing about the asset price.”
Despite these changes, housing costs remain steep, and incomes are not rising at a pace that aligns with home price increases. As a result, the number of renters transitioning to homeownership will likely be too small to create a meaningful shift in the rental market.
According to Canada Mortgage and Housing Corporation (CMHC), London’s turnover rate, which measures the percentage of rental units that become available annually, has dropped to 14.4% in 2023. This is part of a broader trend, driven by the city’s ongoing housing shortage, that pushes rental prices upward. The fewer units available for rent, the higher the demand—and consequently, the higher the prices.
Stephen Williamson, an economist at Western University, agrees that while the new policies may benefit some first-time buyers, their overall effect on the rental market will be limited. “These programs are mainly directed at first-time homebuyers, and that makes the effect smaller,” he explains.
Although rental price increases have slowed in 2024, the pressure on London’s rental market persists. Data from Rentals.ca shows a slight year-over-year drop of 1.4% in asking rents for one-bedroom apartments in August 2024, with the average rent at $1,775. However, this modest decline does not signal long-term relief for renters.
Experts agree that while easing mortgage rules may help some renters transition into homeownership, more comprehensive solutions are needed to address London’s rental crisis. Without increasing the supply of affordable housing, the rental market will continue to face intense pressure.
