Is it time for Canada to embrace the 30-year mortgage?

financialpost.com:

The possibility of allowing longer mortgage amortizations has come up repeatedly in Canada over the years, with regulators and lawmakers generally taking a conservative approach and pushing in the opposite direction. But with housing affordability at crisis levels, is it finally time for Canada to embrace mortgages of 30 years and beyond? The Financial Post’s Denise Paglinawan explores the issue.

In Canada, when talk turns to 30-year mortgages, generally we are talking about the amortization period — that is, the length of time it would take to pay off a mortgage in full, at a given monthly payment level and current interest rates. The standard amortization period has historically been 25 years in Canada though those with a down payment of at least 20 per cent can access longer terms. At least one lender, Equitable Bank, recently offered a 40-year amortization product, though it is no longer available.

While amortizations are still generally 20 or 25 years, the actual term of a mortgage contract in Canada is much shorter, usually five years. That means every five years, Canadians need to renew their mortgages at prevailing rates. This differs markedly from the United States, where are the norm. That means you have the same loan for 30 years, and are stuck with the interest rate. Sometimes, those two ideas get confused, so it is important to draw the distinction.

This month, an industry group representing Canadian homebuilders called on the government to relax rules around 30-year mortgage amortizations in order to help make it easier for first-time homebuyers to enter the housing market. The Canadian Home Builders’ Association was referring to the rule that limits buyers to 25-year amortizations for insured mortgages,