The federal government is unlocking $20B in low-cost financing for the construction of rental apartments.
The annual limit for the Canada Mortgage Bonds program is being increased from $40B to $60B, Chrystia Freeland, Deputy Prime Minister and the Minister of Finance, announced on Tuesday. The program generates funds for residential mortgage financing.
The increase will unlock low-cost financing for multi-unit rental construction, and help to build up to 30,000 additional apartments per year across the country. It has no fiscal impact on the federal government, Freeland noted.
The move comes on the heels of the government’s proposed removal of GST on new rental housing, which is expected to drive up demand for financing even further.
Increasing the Canada Mortgage Bond issuance limit by $20B per year will help ensure that builders and developers have access to the low-cost financing they need to get shovels in the ground.
The increase will be allocated to mortgage loans on multi-unit rental projects insured by the Canada Mortgage and Housing Corporation. Eligible projects must have at least five rental units and can include apartment buildings, student housing, and seniors' residences.
"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," said Sean Fraser, Minister of Housing, Infrastructure, and Communities.
"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."