Earlier today, the Office of the Superintendent of Financial Institutions (OSFI) announced that, effective June 1, 2021, it will implement a new minimum qualifying rate for all uninsured mortgages. The Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, issued the following statement:
"For many Canadians, the most important investment they will ever make is the purchase of a home. Increasingly, however, that dream is becoming unaffordable and unattainable. The recent and rapid rise in housing prices is squeezing middle class Canadians across the entire country and raises concerns about the stability of the overall market.
"Maintaining the health and stability of Canada's housing market is essential to protecting middle class families and to Canada's broader economic recovery. This week alone I have spoken with a number of municipal leaders and some of Canada's leading private sector economists about rising housing prices, the issue of housing supply, and maintaining affordability for the middle class, including for young families and new Canadians.
"With today's official confirmation from OSFI of the new minimum qualifying rate for uninsured mortgages, the federal government will align with OSFI by establishing a new minimum qualifying rate for insured mortgages, subject to review and periodic adjustment, which will be the greater of the borrower's mortgage contract rate plus 2 per cent, or 5.25 per cent. This will apply to insured mortgages approved on June 1, 2021, or later.
"It is vitally important that homeownership remain within reach for Canadians. We know that we need to take energetic action on housing supply and affordability in Canada. Since 2015, our government has made historic investments to increase supply, make housing more affordable, and ensure Canadians have a place to call home. This includes:
- Over $70 billion in the National Housing Strategy, launched in 2017, that will support the construction of up to 125,000 affordable homes and increase Canada's housing supply.
- The First-Time Home Buyer Incentive, which reduces a first-time buyer's mortgage payments to make buying a home more affordable. The government recently expanded access to this support, to make sure more middle class Canadians in Toronto, Vancouver, and Victoria, who live in Canada's most expensive housing markets, can benefit from this support.
- The Rapid Housing Initiative to address urgent housing needs for vulnerable Canadians in all regions of Canada. This $1 billion program will be expanded with an additional $1.5 billion from the recent federal budget.
- On January 1, 2022, our government will introduce Canada's first national tax on vacant property owned by non-resident, non-Canadians. Houses should not be passive investment vehicles for offshore money. They should be homes for Canadian families.
- An unprecedented $300 million investment, through the Rental Construction Housing Initiative, to support the conversion of the empty office space that has appeared in our downtowns into affordable housing.
- The largest transit investment in Canadian history to build public transit across Canada, from urban to rural areas, and to make our communities more livable and more affordable. This is critical to supporting working families and providing them with more options of where to buy a home in Canada. The federal government will invest $14.9 billion in public transit projects over the next eight years, with $3 billion per year in permanent funding.
"On May 31, 2021, I will meet with the Federation of Canadian Municipalities' Big City Mayors' Caucus and discuss what further action can be taken to address housing affordability in our communities. I am looking forward to hearing from the mayors and working with them to take strong action to increase housing supply for middle class families across the country.
"As promised in the Speech from the Throne, and supported through recent investments in the federal budget, we will continue to take the action necessary to ensure every Canadian can afford a place to call home."
