Mortgage Reforms Exactly What is Needed to Enable More Housing Supply
OTTAWA, ON – September 16, 2024 – Today the federal government announced important changes to mortgage rules that will enable more well qualified buyers to access mortgages and become homeowners, which will drive more housing construction and supply. These changes are reflective of recommendations that the Canadian Home Builders’ Association (CHBA) has been calling for, as without qualified buyers, the industry can’t build the homes Canada needs.
Since the sub-prime crisis of 2008-2009, ever-tightening mortgage rules in Canada have made attaining the dream of homeownership increasingly difficult, despite the fact that Canada’s financial system is one of the best in the world and could safely accommodate adjustments to insured mortgages. Today’s announcement to allow 30-year amortizations for first-time buyers and for newly constructed homes, as well as a higher limit on insured mortgages to reflect today’s house prices, is exactly what the market needs to help to correct the falling trajectory of housing starts and build more homes.
“CHBA is very pleased to see these moves on the mortgage rules,” stated Kevin Lee, CEO of CHBA. “These types of changes are exactly what CHBA has been calling for, because we simply can’t build homes, be they condos, townhomes or whatever housing form makes sense, if owners can’t qualify for mortgages. Better access to mortgages will enable buyers to access the market, driving more housing starts and giving industry a chance to push towards targets to close the supply-demand gap. Canada can’t aim to double housing starts, or to industrialize the housing sector to achieve that, if buyers can’t buy—it is exactly these types of policy changes that are needed to create the conditions necessary to move forward.”
While some will argue that improving access to mortgages will have some inflationary effect on the market, particularly in the existing market, the fact is that remaining in a state of extreme under-supply of houses, which Canada has been experiencing in recent years, is a much stronger driver of home price inflation. Lee reinforced: “If we don’t quickly start building more houses, falling interest rates will create more demand on the limited number of homes available, further driving up prices. We need to come at the housing shortage from every angle, and adjusting mortgages rules is a big part of that. Canadians who want to buy their first home need a fair opportunity to do so, and young Canadians who were able to buy a starter home, like a condo, need to be able to get an insured mortgage for their next home, for example a new townhome. Today’s changes will help enable them to do so, and will drive more supply of the types of housing Canada needs.”
CHBA’s Housing Market Index, which measures the sentiment of builders ahead of housing starts, has shown disastrous projections this year for the months and years ahead, reinforcing CHBA’s calls for mortgage reforms to help turn the tide. “While interest rates will come down slowly, in new construction we still face high material and labour prices—there hasn’t been any room to lower the price on new builds, so the result has simply been falling starts and lack of builder confidence for the future. We still need development taxes to come way down, and permitting, zoning and other local regulation adjustments to enable more supply faster, but access to mortgages for young and new Canadians is an important part of the mix, and this is a very good step,” added Lee.
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MEDIA INQUIRIES
Journalists wishing to interview Kevin Lee, Chief Executive Officer of the Canadian Home Builders’ Association are encouraged to submit their request by email to media@chba.ca.