The federal government is unlocking another $20 billion in low-cost financing for the construction of rental housing across Canada, Finance Minister Chrystia Freeland announced Tuesday.
The Canada Mortgage Bonds program, which raises funds for residential mortgage financing, had an annual limit of $40 billion.
The limit is being increased to $60 billion, with the additional funds aimed at increasing rental construction specifically. This includes apartment buildings, student housing and senior residences.
The federal government says the new funding will boost rental construction by 30,000 units annually.
“There is no fiscal impact for the government of Canada as a result of this measure. This is fiscally responsible policy using policy tools at our disposal,” Freeland told reporters Tuesday in Ottawa.
“This is a further measure in our broader and continuing campaign to build more homes for Canadians faster.”
Freeland says the program allows developers to access loans from financial institutions for multi-unit rental projects at an interest rate that is one to two percentage points lower than a conventional mortgage.
The latest announcement comes as federal government is facing pressure to help alleviate the national housing shortage, including by providing incentives to developers to build more homes.
The Canada Mortgage and Housing Corp. estimates the country needs to build an additional 3.5 million homes — on top of the current pace of building — by 2030 to restore affordability.
Meanwhile, the annual rate of housing starts in August came in at about 250,000 units.
The Liberals also introduced legislation last week to eliminate GST charges on rental developments as Ottawa ramps up efforts to increase the housing supply.
Experts say the shortage of purpose-built rentals is the most acute and is eroding housing affordability across the country.
“Our message to builders today is that it’s time to get shovels in the ground,” said federal Housing Minister Sean Fraser, who was also at the announcement.
“We are going to leverage all the tools at our disposal to make it easier for you to say yes to build more homes for Canadians,” Fraser said.
“We’re going to address the specific challenges at the root of the housing crisis we’re living through.”