By Promit Mukherjee

OTTAWA (Reuters) – Canadian Finance Minister Chrystia Freeland on Monday announced changes to some mortgage rules as part of an effort to make housing more affordable, a critical political issue that has hurt Prime Minister Justin Trudeau and his Liberal government.

Freeland said the government was increasing the cap on insured mortgages to C$1.5 million ($1.10 million) from C$1 million earlier, which would allow more people to buy a house with the minimum down payment already required of 5%.

Previously, Canadians who do not pay at least a fifth of the cost of the house as a down payment need to take out mortgage insurance, but the insurance was available only for homes priced at C$1 million or less. That limit is now C$1.5 million.

In addition, purchasers will be able to take out loans for a 30-year period if they are first-time home buyers or if someone is buying a newly built house, Freeland said. Earlier, the three-decade amortization period was limited to first-time buyers buying newly built houses.

The measures will “incentivize more new housing construction and tackle the housing shortage,” Freeland said in a statement.

Trudeau’s polling numbers have slumped to an almost all-time low of 30% in September, which analysts and economists have said is primarily because millions of people are wrestling with high prices, especially of homes and rents.

In Canada, mortgages are typically for 25 years and the rate resets every three or five years. In the United States, homeowners can enjoy a fixed rate for the entire life of a 15-year or 30-year mortgage.

The structure of Canadian mortgages exposes most borrowers to rising interest rates and has fueled a housing affordability crisis that has been exacerbated by a record influx of immigrants.

($1 = 1.3593 Canadian dollars)

(Reporting by Promit Mukherjee in Ottawa; Editing by Frank McGurty and Leslie Adler)