The 2019 Federal Election is over. We congratulate all
those who were elected, and look forward to working with all parties and their
leaderships in the coming weeks and months.
Our initial expectation is that mortgage rules and related
policy will not be a top priority for Justin Trudeau’s 156-seat minority
government. We do believe the Liberals will implement their national tax on
vacant residential properties owned by non-Canadians who don’t live in Canada,
likely in the spring budget. The promised increases to the FTHBI in the GTA,
GVA and Victoria would be welcomed but may not be immediately forthcoming. We
expect there will be further internal dialogue between the Ministry of Finance,
CMHC, Bank of Canada and OSFI before this promise is implemented, either as
presented or with modifications. We anticipate many of the policy folks will
want to keep the limits where they are for fear of increasing housing demand
and therefore prices (especially given the Toronto market’s performance on
recent months), while elected officials will want to move forward with the
promised increase. We will monitor those discussions closely.
Since the beginning of 2018, MPC has asked all parties to
reintroduce mortgage insurance eligibility for 30-year amortizations. We are
thankful to the NDP and the Conservative Party for adding this to their
respective election platforms. We do not expect the Liberals will consider
adoption of insurable 30-year amortizations as policy independently, but in a
minority government, opposition allegiances can set the agenda of the day. We
will ask the NDP and Conservative Party to help convince the Liberals on this
issue, and the overall success of the FTHBI will likely determine Parliament’s
appetite to press this issue. Insurable 30-year amortizations remain a sensible
idea with a lower overall cost and exposure to taxpayers when compared to
FTHBI, and with immediate benefit to aspiring homebuyers.
(It is also possible that the FTHBI could be replaced by 30-year ams, but we see FTHBI surviving through this Parliament, at
We have also asked all parties to work with OSFI to
remove the mortgage stress test on renewals or switches. The Conservatives made
this part of their platform, and Liberals and NDP caucus members we meet with
are by and large supportive of this, too. We will work hard on this.
Finally, there is the real issue of regionalizing
“one-size-fits-all” national policy. Justin Trudeau announced regionalized
adjustments to FTHBI for Toronto and Vancouver just 10 days after the program
went live. From the onset, MPC suggested FTHBI was going to have poor uptake
without changes to account for Vancouver and Toronto housing prices. At an
important October housing debate we attended, Adam Vaughan, a Liberal MP with a
strong housing portfolio, cited Trudeau’s September promise to change FTHBI as
proof Liberals would now work to regionalize OSFI and CMHC policies where it
National policies implemented intending to cool the
Vancouver and Toronto housing markets have harmed most other markets in Canada
that didn’t need cooling (especially Alberta and the Prairies). With the
feeling of “Western Alienation” regrettably now more pronounced post-election,
we feel there is a greater likelihood that Mr. Vaughan and the Liberals will
insist on fewer “one-size-fits-all” policies, where logical and possible, and
we will assist them.
While many Canadians will want to see action, minority
governments last longest when they keep it simple, and not act too boldly. No
party wants another election so soon, certainly not with depleted candidates,
volunteers, and party bank accounts.
Regardless, MPC will not wait. We will have early discussions
with all parties on how to improve homeownership across Canada. We will update
you on our efforts in the coming months.