The federal government is making an additional $20 billion in financing available for developers looking to build rental units.
Finance Minister Chrystia Freeland announced Tuesday that Ottawa will raise the annual cap on the Canada Mortgage Bond program from $40 billion to $60 billion.
Freeland said the announcement compliments the government’s recent move to take the GST off the construction of new rental apartments.
“We’re already seeing more demand for financing of new rental construction,” she said.
Mortgage bonds are sold by the Canada Mortgage and Housing Corporation (CMHC). The proceeds are then used to offer mortgage loan insurance to financial institutions, which can in turn pass on lower interest rates to developers.
“When lenders pass on favourable rates to builders, builders build more homes. It’s that simple,” Housing Minister Sean Fraser said.
In order to qualify for the loans, projects must have a minimum of five units, Fraser said.
The government expects the measure will ensure 30,000 more rental units are built annually.