Canada’s largest banks and homebuilders are calling on Ottawa to ease mortgage rules and provide financial support to first-time homebuyers and developers. The National Housing and Investment Initiative, released on Tuesday, outlines 29 recommendations aimed at improving housing affordability across the country. Key proposals include down payment assistance programs, reduced down payment requirements, and tax deductions for mortgage interest payments.
The report, endorsed by major lenders like Royal Bank of Canada, BMO, and CIBC, as well as homebuilders such as Mattamy Homes and Wesgroup Properties, also suggests reforms to the mortgage stress test. The current test, which requires borrowers to qualify at a higher interest rate, is seen as a barrier to homeownership. The group recommends a sliding stress test based on mortgage terms and buyer type, particularly easing requirements for first-time buyers of new homes.
Another major recommendation is providing low-cost financing to developers of condos, townhomes, and single-family homes. Currently, federal low-cost financing is only available for rental-only buildings. The report argues that cheaper financing would reduce the risk for lenders and lower pre-sale thresholds for developers, potentially revitalizing the struggling new condo sector.
Beau Jarvis, CEO of Wesgroup, noted that access to low-cost financing could help developers complete projects with unsold units, though it would require a return to a more speculative development model. BMO’s James Burrow emphasized the role of banks in catalyzing capital but highlighted the need for federal support during the riskiest stages of home development.