Key Points from the Federal Election Campaign in Canada
Mortgage alphabet
The election campaigns are underway, and the federal parties have begun laying out their plans to improve housing affordability for voters.
The Liberals are promising to build 100,000 affordable housing units over the next 10 years. They also plan to help first-time homebuyers through their new initiative, which will provide up to 10 percent of the price of a new home and 5 percent of the price of a resale property (with certain restrictions).
The NDP has more ambitious plans, promising to build 500,000 affordable housing units over the next ten years.
The core message of the Conservative Party's campaign is that people should be thriving, not just getting by. According to the Conservatives, the government needs to get out of Canadians' pockets in areas like the carbon tax, which the party describes as ineffective. The Conservatives have pledged to simplify building regulations to boost the supply of affordable housing. What's more, Conservative leader Andrew Scheer said that if elected, his party plans to take the following steps to improve the real estate market:
1. Fix the mortgage stress test to remove unnecessary hurdles for first-time buyers trying to get a mortgage, and work with the Office of the Superintendent of Financial Institutions (OSFI) to eliminate the stress test at mortgage renewal, giving homeowners more flexibility.
2. Extend the amortization period on insured mortgages to 30 years for first-time buyers, to lower their monthly payments.
3. Launch an investigation into money laundering in the real estate sector and work with industry partners to root out corruption that's driving up home prices.
4. Increase the construction of affordable federal housing to boost supply on the market.
The reality is that housing is becoming less and less affordable in many parts of Canada. According to the Canadian rental housing index, Toronto renters earning roughly $45,498 a year spend 40 percent of their income on monthly housing costs. For renters living outside the core, in York or Peel Region, that figure comes to 44 and 38 percent respectively. That may explain why so many adult children move back in with their parents even after landing a job, or why so many young adults choose to share housing to cut down on steep rental costs.
Across Canada, concern is growing not just over how much housing costs, but over how much of it is actually available.
In 2018, 37,000 new units were built across the country, yet demand grew by 50,000 units, according to the Canada Mortgage and Housing Corporation. Meanwhile, Canadian cities keep growing, fueled by immigration and steady job growth.
Amid today's widely discussed environmental concerns, the leaders of this election race have turned to one of the largest voting blocs, homeowners, offering different plans aimed at helping households save money through eco-friendly upgrades.
Conservative leader Andrew Scheer was first out of the gate. Although the Conservatives had unveiled their green strategy back in June, the party leader used the opportunity to highlight one specific plank of his platform: a 20 percent refundable tax credit that, he says, will help people save up to CAD $3,800 on eco-friendly home renovations.
This gave Scheer an opening to start in on Trudeau's overall green plan. The Conservative leader said his opponent's plan was written on a napkin, which, he added, just goes to show that Trudeau is a master of improvisation.
Scheer mocked Trudeau's earlier commitment to make Canada fully net-zero by 2050. Canada has already pledged to cut annual greenhouse gas emissions to 30 percent below 2005 levels by 2030. According to Scheer, Trudeau isn't just failing to hit the 2030 target, he's now also talking about what he intends to do by 2050 without providing any real details.
Scheer believes that, unlike the Liberals, his party has put together a genuine plan to protect the environment, one that's realistic and achievable. In Scheer's view, this isn't just the most comprehensive plan any political party has ever put forward, it also has the best shot at meeting the goals of the Paris Agreement.
Justin Trudeau, for his part, promised interest-free loans of up to CAD $40,000 to replace aging furnaces, fix leaky windows, or retrofit homes to make them more energy-efficient and more resilient to flooding or wildfires driven by climate change.
He also didn't pass up the chance to criticize the Conservatives for their lack of a track record on the environment. In Trudeau's view, Scheer's plan resembles the do-nothing approach used by former Prime Minister Stephen Harper, one that will do less while costing more. Trudeau said that, unlike the Conservatives, who refuse to acknowledge the problem of climate change, the Liberal government has done a great deal to tackle the issue and acknowledges that this is only the beginning of the road ahead.
That said, Trudeau still had to answer the question of exactly how his plan would meet the 2030 target.
According to Trudeau, the country has already covered three-quarters of the necessary distance, and within 11 months, Canada will not only hit its target, it will get ahead of it, reaching net-zero emissions by 2050. How exactly will this happen? Trudeau offered few details, but stressed that the key, broadly speaking, lies in innovation, developing technologies that reduce pollution.
For genuine proposals to help first-time buyers, Mortgage Professionals Canada (MPC) thanks Conservative leader Andrew Scheer on behalf of all its members. After many productive conversations with the party over recent days and months, the organization is pleased to see its recommendations formally included in the Conservative platform.
It's already been confirmed that, in the context of these announcements, first-time buyers are defined the same way as under the First-Time Home Buyer Incentive. There are a few small aspects of the definition still needing clarification, but MPC is proud to have played a part in helping shape this. The organization looks forward to continuing to work with party members as they develop measures that are genuinely needed by current and future Canadian homeowners.
At the same time, today's challenges don't end with this announcement. We strongly encourage you to raise all of these points with your local candidates directly, whether in person, on social media, or through any other channel. Knowing that housing affordability is without question a major issue in this federal election, we suggest asking the following questions directly to the candidates in your riding whom you're leaning toward supporting:
1. Does your party support lowering the mortgage stress test qualifying rate, currently set at 5.19 percent, even as five-year rates below 3 percent are available on the market? If so, what level does your party consider appropriate for the stress test? If not, ask the party to describe its alternative approach to this issue.
2. Does your party support eliminating the stress test for borrowers who have successfully made their mortgage payments throughout their entire current term and now want to switch to a different lender at renewal? If not, ask the party to describe its alternative approach to this issue.
3. Within its first year in office, will your party restore the 30-year amortization period for first-time buyers with an insured mortgage? If not, does the platform include an alternative approach offering additional financing options to help middle-class Canadians? Or does your party believe the real estate market is currently well-structured and doesn't need any changes? Ask them to explain in more detail.
4. How will your party support or incentivize new construction to prevent sharp price increases driven by insufficient market supply?
5. What other measures in your party's platform address the real estate and mortgage lending issues raised by the mortgage broker association and its clients?
These questions, among others, were officially sent to the headquarters of every federal party holding seats in the House of Commons as of August 2019. MPC will share the official responses as soon as they're received.
As a reminder, the election will be held on October 21, be sure to vote!