OTTAWA — The Liberal economic collapse statement will have a significant focus on housing, the National Post has learned, with low-cost loans for apartment construction, tax measures to curb short-term rentals, and new rules for how banks deal with people who are already struggling. with their mortgage.
Finance Minister Chrystia Freeland will deliver the Fall Economic Statement Tuesday afternoon as the Liberals face polls that show the party could easily be unseated in an election against Conservative leader Pierre Poilievre, with cost of living and housing affordability continues to be at the forefront of issues for Canadians.
A senior government official outlined to the National Post what to expect from the statement, but spoke on a non-attribution basis because they were not authorized to speak publicly. They say the range of housing measures is about “supply, supply, supply,” as they hope to lower housing costs across the country.
The government will release a “Canada Mortgage Charter,” with a new set of rules for federally regulated mortgage lenders. It would require banks and mortgage holders to work with people who fall behind on their payments, including offering longer amortization rates.
Banks will also be prohibited from charging any relief fees for offering such assistance, and must warn mortgage holders of pending renewals four to six months before renewal, which gives customers time to shop around.
The charter will also make minor changes to the current “stress test” regime. People looking for mortgages now face a stress test that forces lenders to make sure borrowers can afford their mortgage if rates are two percent higher than they are today. When homeowners renew their mortgage, they face the same test unless they stay with their current bank. Tuesday’s update will remove the stress requirement for mortgage renewals, even if someone switches banks.
Dan Eisner, founder and CEO of True North Mortgage, said much of what’s in the proposed charter wouldn’t be different from standard industry practice today, but the change in stress test rules around renewals would can make a big difference.
“That’s not mean; that opens the door for banks, forcing banks to be more competitive on renewals.”
Eisner said banks today can keep people locked in, because some homeowners have trouble passing a stress test when they renew their mortgage.
“They’ll raise your rate because you can’t go anywhere else. That’s a real fear, especially with rates going higher,” he said.
He said most people coming in for renewals are in decent financial shape, as their incomes have likely increased and they’ve paid off a large portion of the principal, but the ability to shop more easily for new ones rate will help.
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Senior government officials also confirmed earlier media reports that the government will prevent people who own short-term rentals, such as AirBNBs, from deducting costs if they do not comply with municipal rules prohibiting or licensing short stays.
They said the government hopes it will push short-term rental owners to sell their units or put them up as monthly rentals.
“This will change the equation for short-term rentals,” the source said.
The government is also expected to announce $15 billion in low-cost loans for apartment developers, which they estimate will get 30,000 new units to be built.
The source said the update would be a smaller document with a focus on housing and affordability measures. They said that the government knows that growth is slowing and inflation is cooling, and that the document will not be like the big spending budgets that the government made during the pandemic, and that the government will be more restrained.
“We are no longer in the depths of a pandemic.”
Poilievre issued three demands ahead of Tuesday’s budget. He wants the government to cancel the upcoming carbon-tax hike, balance the federal budget, and announce a plan to build more homes.
He said the government’s plan so far has only been to create more photo-ops instead of more housing. He argued that Liberal spending had done serious damage to the economy.
“After eight years of Trudeau in a record breaking two million Canadians forced to take food banks lined up around the block in ways we haven’t seen since the Great Depression.”
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