Today, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced that the annual limit for Canada Mortgage Bonds is being increased from $40 billion to up to $60 billion. This change is the next step in the government’s plan to build more homes, faster, and will unlock low-cost financing for multi-unit rental construction. This new measure will help to build up to 30,000 more rental apartments per year.
The Canada Mortgage and Housing Corporation (CMHC) and the Canada Mortgage Bond program support the low-cost financing of new rental housing by providing mortgage loan insurance and securitization.
There is currently unmet demand from developers and builders to access low-cost financing, which is preventing them from building much-needed rental apartments. With the federal government removing the Goods and Services Tax on new rental housing, as proposed in the Affordable Housing and Groceries Act, the demand for financing is expected to further increase.
To ensure builders have the low-cost financing required to build more rental projects, the government is increasing the Canada Mortgage Bond issuance limit by $20 billion per year and designating the increased amount for funding mortgage loans on multi-unit rental projects insured by CMHC. Eligible rental projects must have at least five rental units and can include apartment buildings, student housing, and senior residences.
By signalling to builders that they can rely on this additional financing, more projects will be able to move forward and increase the supply of rental apartments for Canadians.
Housing financing is part of the government’s comprehensive suite of broad-based solutions to build more homes, faster, in Canada. The government is also announcing that CMHC will launch consultations with the housing financing sector in order to inform potential additional solutions to increase Canada’s rental housing supply.
“Our government is focused on building more homes, faster. Today’s announcement to unlock up to $20 billion in low-cost financing for rental construction is the next step in our plan to do exactly that—and we will continue working to help make housing more affordable for Canadians from coast to coast to coast.”
“If you are a home builder, we want you to build. We are going to help by changing the financial equation. Given the cost pressures home builders are facing, this will ensure projects go ahead that otherwise would have sat on the shelf. Today’s announcement is a signal to the market. If you’re in the business of building homes, it’s time to get shovels in the ground.”
- CMHC Multi-Unit Mortgage Loan Insurance supports the construction, purchase, and refinancing of residential properties by protecting lenders against loss from mortgage default, helping to lower borrowing costs for builders, and facilitating access to capital. CMHC securitization programs offer lenders inexpensive and reliable access to funding, which results in competitive rates charged to builders.
- The annual limit increase to the Canada Mortgage Bond has no fiscal impact for the Government of Canada and will not increase CMHC Multi-Unit Mortgage Loan Insurance premiums.
- CMHC’s housing financing consultations will help determine the best use of mortgage insurance and securitization policy levers in order to support the rental housing sector in the medium- to long-term. This includes how to best increase Canada’s supply of housing, promote efficiency and competition in the housing finance market, and contribute to the stability of the financial system.
- Today’s announcement builds on the federal government’s recent actions to make housing more affordable for Canadians, including:
- The Affordable Housing and Groceries Act, which would remove the Goods and Services Tax (GST) on new rental housing;
- The $4 billion Housing Accelerator Fund, which was launched earlier this year to cut red tape, address outdated local policies like zoning, which are preventing construction, and build more homes, faster; and,
- The new tax-free First Home Savings Account, which is helping Canadians to contribute up to $40,000 tax-free towards their first down payment.
- The increase to the annual Canada Mortgage Bond limit is independent of and does not impact the Budget 2023 announcement and subsequent consultations on how to further support Canada’s mortgage market and generate revenues for affordable housing. The government will continue reviewing consultation feedback from stakeholders.