In recent weeks, Mortgage Professionals Canada, the national association for the mortgage broker channel, met with more than 60 parliamentarians from all official federal parties as part of our Advocacy Days (which you can learn more about here). These meetings were held in advance of the Federal Budget 2022 tabled today by Finance Minister Chrystia Freeland, so that MPC’s messaging could be widely heard in the halls of Parliament Hill. With that, we are pleased that Housing is Chapter 1 in Budget 2022. We may not agree on all the measures introduced, and regret that some were avoided, but the government and MPC definitely agree on how Canadians perceive the future of homeownership, and that confidence needs to be raised in younger Canadians trying to join the middle class.
In 2019, Prime Minister Justin Trudeau said that his goal for the First Time Home Buyer Incentive was, “To make sure homeownership remains an achievable dream, not a privilege afforded to only the richest few.” While MPC disagreed that FTHBI was an effective way to help him achieve that goal, we did believe that his government was sincere in its hopes to grow Canada’s middle class through homeownership. Since Budget 2019, we have held well over 100 meetings with parliamentarians from all official parties, helping to ensure that our recommendations turned into election promises. We have worked especially hard to get officials to recognize the need to shift collective focus from policies which tried to throttle housing demand to those which increased housing supply. After all, a global pandemic proved that demand, and prices, could not be easily controlled absent greater supply.
For Canada’s first post-COVID budget, MPC recommended in our February 2022 pre-budget submission to Finance Minister Chrystia Freeland that the federal government should immediately:
- Implement the mortgage insurance pledge to “increase the insured mortgage cut-off from $1 million to $1.25 million, and index this to inflation, to better reflect today’s home prices”;
- Provide qualified first-time home buyers access to mortgage amortization periods of up to 30 years for insured mortgages;
- Implement the pledged tax-free First Home Savings Account, which would “allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it”.
On Thursday, Finance Minister Freeland chose to begin Budget 2022 with Housing:
Chapter 1: Making Housing More Affordable
Everyone should have a safe and affordable place to call home. But that goal—one that was taken as a given for previous generations—is increasingly out of reach for far too many Canadians. Young people cannot imagine being able to afford the house they grew up in. Foreign investors and speculators are buying up homes that should be for Canadians to own. Rents in our major cities continue to climb, pushing people further and further away from where they work.
All of this has an impact on our economy, too. In cities and communities across the country, a lack of affordable housing makes it more difficult to attract the workers that businesses need. Increasing our housing supply will make Canada more competitive in the global race for talent and investment. It will help make sure that our economy can continue to grow in the years to come.
MPC agrees, and is grateful that Housing is this government’s top item in Budget 2022.
The Housing measures proposed in Budget 2022 are categorized under Building Affordable Homes, Helping Canadians Buy Their First Home, Protecting Buyers and Renters, and Curbing Foreign Investment and Speculation. Below are our comments on items related to those issues we have advocated for, and/or are directly related to our industry.
We are very glad housing supply is front and center. This needs to be the top priority of all levels of government, and incenting lower levels to get digging and moving is what the federal government needs to continue doing. From Budget 2022, “Incentivizing cities to build more homes and create denser, more sustainable neighbourhoods to increase housing supply,” “Using Infrastructure Funding to Encourage More Home Construction”, and “Leveraging Transit Funding to Build More Homes” are all laudable goals. We foresee some challenges in their successful implementation, and expect that to achieve success, provinces must also help to encourage municipalities and allay the fears of small but tactically savvy groups of NIMBY residents. The Housing Accelerator Fund, administered by CMHC, has noble goals which we hope can deliver what it promises, and at a reasonable cost to taxpayers.
We are pleased to see the government is moving forward with the campaign promise to create a First Home Savings Account (FHSA), one of MPC’s three recommendations. We said there was real value and benefit to the concept, as it will help aspiring Canadian homeowners to prudently save and grow their money, an essential element to sensibly achieving homeownership. We note that we have already asked that the government would permit transfers from existing RSP plans into the proposed FHSA, and that it would allow immediate family members – siblings, parents, grandparents - to make gifts of transfers from their own RSPs to a FHSA without any tax penalties to the benefactor. We will continue to advocate for this in advance of FHSA’s implementation in 2023.
The proposed doubling of the First-Time Home Buyers’ Tax Credit to $10,000 is strongly supported by MPC.
Budget 2022 also announced “an extension of the First-Time Home Buyer Incentive (FTHBI) to March 31, 2025, and that the government is exploring options to make the program more flexible and responsive to the needs of first-time home buyers, including single-led households.” MPC continues to believe that allowing for 30-year amortizations for insured mortgages is the superior, more accessible, simpler, more practical, and fairer overall solution for Canada’s aspiring first-time home buyers, a solution with benefits to CMHC and other mortgage insurers and providers, and without FTHBI’s known administrative costs, very limited eligibility criteria, and other potential taxpayer burdens. Without prejudice, the facts behind FTHBI’s unpopularity no longer merely speak for themselves - they shout. We hoped the government would finally agree with the NDP, Conservatives, and many within the Liberal caucus and finally allow 30-year amortizations for insured mortgages for Canada’s first-time home buyers, a multipartisan solution preferred by a wide majority of Parliament. That being said, we agree that single-led households have had an exceptionally difficult time in recent years, and are glad this group received specific mention. We will see how Ministers Freeland and Hussen will attempt to tweak FTHBI for the third time in its three years of existence. We also will work to ensure that MPC – representing a mortgage brokering channel which now helps to originate roughly 60% of all mortgages for Canada’s first-time homebuyers – will play a part in the FTHBI review process.
MPC recently submitted comments to the Government of British Columbia on items contained in the announced Home Buyers’ Bill of Rights related to real estate practices. Like many in the community, we believed that such measures fall under provincial jurisdiction, but we will see how this item progresses and be part of the process as required.
On Protecting Canadians From Money Laundering in the Mortgage Lending Sector, MPC supports AML and anti-terrorism measures which protect Canadians. We look forward to working with the federal government and provincial governments where required as legislation related to this announcement is developed.
Members should note that Budget 2022 also discusses Making Property Flippers Pay Their Fair Share. The government looks to tax anyone “who sells a property they have held for less than 12 months would be considered to be flipping properties and would be subject to full taxation on their profits as business income,” with understandable exemptions.
We are disappointed with the lack of mention of the election campaign promise to increase the mortgage insurance purchase price eligibility limit but also understand that such a change does not require budgetary approval; such an amendment is available at the Finance Minister’s discretion when she deems appropriate. Hopefully there will be a separate announcement related to this in the coming weeks. A lengthy delay in the implementation of this promise, in the face of continual house price increases, will only serve to erode the benefits of such a change.
We believe these are the items to inform our members of at this time. Again, Housing is Chapter 1 in Budget 2022, and we appreciate that the government has acknowledged the importance of MPC’s advocacy to Parliament in recent months. We look forward to ongoing conversations with officials, and to the progression of these proposals through 2022. We will also continue to keep MPC members informed.
President and CEO
For reference, MPC’s 2022 pre-budget submission to DPM/Finance Minister Chrystia Freeland can be found here.