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Of all the housing measures federal government has announced lately, the one with the most immediate impact will be expanding the availability of 30-year mortgages.

Starting Aug. 1, first-time buyers purchasing newly built homes with a down payment of less than 20 per cent will be able to amortize their mortgages over 30 years, up from the current 25. If you put down 20 per cent or more on a mortgage, and thus don’t need mortgage default insurance, you can already amortize over 30 years.

To get a sense of how broadening of the 30-year mortgage will affect the marketplace, I checked in with mortgage broker Victor Tran of True North Mortgage. Mr. Tran’s clients are in the Toronto area, where the average home price is above $1-million. He said eight in 10 of his clients come in with a down payment of 20 per cent or more, often to secure a 30-year amortization. Also, on houses costing $1-million or more, 20 per cent is the smallest possible down payment.

Focusing strictly on newly built homes reduces the risk that opening up 30-year mortgages to more buyers will stoke demand and push prices higher. But Mr. Tran said most developers require a deposit of at least 20 per cent for new homes. “It makes sense for developers to request a large deposit because they need the funding to get the construction going,” he said.

Mr. Tran also noted the potential for developers to increase prices if demand for newly built homes increases. As for the impact of amortizing a home over 30 years instead of 25, he pegged the savings at about $250 per month on a $500,000 mortgage at a 5 per cent rate. “Every bit of savings helps,” he said.

Much of the federal government’s efforts to improve housing affordability will focus on getting more homes built. But there’s one more measure with potential to have a quick impact. In the budget to be released Tuesday, the government will propose that first time buyers be able to withdraw a maximum of $60,000 from registered retirement savings plans under the federal Home Buyers’ Plan, up from $35,000.

Mr. Tran said his clients are already funding their down payments with a mix of money from RRSPs and tax-free savings accounts and doesn’t see the extra RRSP withdrawal room making much difference.

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