Ottawa is planning to spend approximately $20.8 billion over six years, prioritizing affordable housing and clean energy
In its latest economic statement, the federal government pledged to continue incentivizing the development of more housing supply at a quicker pace by removing the zoning, financial, and regulatory barriers to construction, particularly of rental and affordable housing.
Ottawa is planning to spend approximately $20.8 billion over six years, with much of this amount focused on the top priorities of affordable housing and clean energy.
“Outdated and unnecessary zoning restrictions delay development and increase costs – and in too many cities across the country, they prevent housing from being built at all,” Finance Minister Chrystia Freeland said in a just released budget update.
Citing data from the Canada Mortgage and Housing Corporation, Freeland said that the current rate of construction is far below the pace needed to build 3.5 million more homes by 2030 to ensure affordability.
“Canada does not have enough homes – and we need to build more of them, fast,” Freeland said. “This challenge is not something that the federal government can solve on its own.”
On top of its already announced and ongoing housing-focused programs, the federal government will be providing an additional $1 billion over three years starting in 2025-26 to support the construction of more than 7,000 new affordable homes.
Also to be provided is another $15 billion in new funding for the development of more than 30,000 new rental homes nationwide.
“The federal government is working with governments across Canada to help them cut red tape, speed up permitting approvals, lift zoning restrictions, and build more homes, faster,” Freeland added.
To avoid ballooning the already massive $40-billion deficit this year, the federal government said that it intends to spread out its proposed spending over time.
The Canadian federal government has introduced Bill C-56, the Affordable Housing and Groceries Act, as part of its efforts to boost housing supply and stabilize grocery prices.
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 25, 2023
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Feds introduce new Canadian Mortgage Charter
In its fall economic statement, the federal government also outlined the Canadian Mortgage Charter, which it said would ensure that “Canadians have access to the tailored mortgage relief they need at a time of higher interest rates.”
The Charter details the assistance that Canadians can expect from banks in times of financial difficulty – a particularly valuable option considering the impending rush of renewals next year.
Among other things, Canadians can expect banks to allow temporary extensions of the amortization period for mortgage holders at risk, as well as waive fees and costs that would have otherwise been charged for relief measures.
The Charter noted that banks will not require insured mortgage holders to requalify under the insured minimum qualifying rate when switching lenders come renewal time. At the same time, banks will be required to contact home owners four to six months in advance of their mortgage renewal to inform them of their renewal options.
Crucially, the Charter requires banks to give at-risk home owners “the ability to make lump sum payments to avoid negative amortization or sell their principal residence without any prepayment penalties.”
“These measures will support more Canadians through the temporary financial stress caused by elevated interest rates and help them stay in their homes,” the federal government said.
