Finance Minister Chrystia Freeland announced Tuesday that the federal government is providing an additional $20 billion in low-cost financing for the construction of tens of thousands of rental housing units across Canada.
The federal government had an annual limit of $40 billion for its Canada Mortgage Bond program, which raises money for residential mortgage financing.
That limit will be increased to $60 billion, which the federal government estimates will lead to an increase in rental housing construction by 30,000 units per year.
“This measure will have no financial impact for the Government of Canada. This is a fiscally responsible policy using the policy tools at our disposal,” said Mr.me Freeland to reporters Tuesday in Ottawa.
Access to better rates
“This is another step in our broader and ongoing campaign to build more homes for Canadians faster,” added the Deputy Prime Minister.
Chrystia Freeland explains that the program allows developers to access loans at an interest rate one to two percentage points lower than a conventional mortgage.
According to a press release, construction projects must include at least five new rental units to be eligible for financial assistance. These may be residential buildings, student residences or residences for the elderly.
The federal government is under pressure to help ease the national housing shortage, including by incentivizing developers to build more housing.
Millions of homes to be built
The Canada Mortgage and Housing Corporation estimates that the country will need to build 3.5 million more homes — on top of the current pace of construction — by 2030 to restore affordability.
Meanwhile, the annual rate of housing starts in August stood at around 250,000 units.
The Liberals also introduced a bill last week to eliminate the GST on the construction of rental buildings, as Ottawa steps up efforts to increase the supply of housing.
Experts say the shortage of purpose-built rental housing is the most severe, eroding access to housing across the country.
“Our message to builders today is that it’s time to get started,” said federal Housing Minister Sean Fraser, who was also present at the announcement.
“We will leverage every tool at our disposal to make it easier for you to say yes to building more housing for Canadians,” he added.