Mortgage Professionals Canada | Mar 28, 2023
Deputy Prime Minister and Minister of Finance Chrystia Freeland delivered the 2023 federal budget in the House of Commons this afternoon.
The full budget plan can be found here.
As indicated in early comments on the budget the government has said they are taking a “fiscally prudent approach”, focused on themes of affordability, the health care system and dental care, and Canada’s fiscal strength and economic competitiveness, such as the transition to a clean economy. The government also indicated Canadians should expect the deficit projections to increase from those in the 2022 Fall Economic Statement, given lower economic growth than previously estimated, and highlighted expectations from private sector economists that the Canadian economy will enter a shallow recession.
As the central focus of Budget 2022 was in housing, and as those measures are coming into force now, housing is not a key focus of this budget. Those housing policies announced in the last budget, such as the First Home Savings Account will come into effect shortly.
“This federal budget reflects the state of the economy as well as the government's agreement with the NDP. Budget 2022 was focused on housing, with measures continuing to roll out now, including the First Home Savings Account, advocated for by the mortgage industry.
We will continue to advocate for making homes more affordable and for Canadians from coast-to coast-to coast to be able to achieve the dream of homeownership.” – Lauren van den Berg, President and CEO, Mortgage Professionals Canada
What it means for us:
- There is recognition that more needs to be done on housing. The budget document mentions that the “consequences of moderating growth have been concentrated in housing markets, with higher mortgage rates pushing resales down 40 per cent, and prices down 16 per cent from their peaks in February. New construction is also slowing.”
- Additional references to the mortgage industry include an ongoing consultation by the Financial Consumer Agency of Canada on a guideline for Canadian mortgage borrowers facing exceptional circumstances, and a reference to the ongoing consultation by the Office of the Superintendent of Financial Institutions on Guideline B-20.
Of note, these measures are not new and reference existing government consultations already underway. MPC is already engaged on these processes.
We will continue our federal advocacy with decision-makers to advance pre-budget requests including: returning to 30-year amortization periods for insured mortgages; eliminating the stress test on mortgage transfers, switches, and renewals; increasing the insured mortgage cut off from $1M to $1.25M; and, mortgage fraud prevention.
Economic & Affordability Measures
Many economic growth measures in the budget were in direct response to the Inflation Reduction Act, introduced by the Biden Administration in the United States.
The government also introduced a number of targeted supports focused on affordability and to help deal with inflation, such as:
- A grocery payment rebate (in addition to the GST rebate), as part of the agreement with the NDP;
- $2.5 billion for one-time inflation relief payments to about 11 million low- and modest-income Canadians, worth up to $467 for a couple with two children, and up to $234 for a single Canadian without children.
With inflationary pressures, rising interest rates and geopolitical tensions, the budget seeks to support the economy and help Canadians, particularly low-income individuals weather current challenges. The government is looking to increase its focus on supporting strategic areas where Canada has built-in strengths and may have a competitive advantage.
Click here to view our 2023 Pre-Budget Submission