Federal Housing Program

Here’s what I would do if I was elected and appointed the Minister of Housing:

1. Establish a legacy housing fund that would provide all Canadians with a 35 year, 1st mortgage, at 1% interest rate, on their principal residence.
2. Promote the benefits of home ownership to Canadian tenants.
3. On ALL government sponsored, not-for-profit, home ownership, housing projects, I would place a covenant on title restricting the resale value of the unit to the original price, plus the CPI increases over time. (e.g. – Buy an apartment at $300,000, sell it in 20 years, with a CPI increase of say 20%, you would be able to resell it at $360,000.) The covenant linking the CPI increase theoretically will make it affordable for the next generation.
4. Wherever possible, convert rental units to ownership units, and provide grants to achieve that goal.

The result of reducing interest rates from say 2% to 1%, with a real 35 year mortgage (not a short term loan – e.g. 5 year term) will help to :

(a) provide stability in the housing market

(b) provide certainty to owners as to their monthly payments for 35 years.

(c) inject the differential between current interest rates and 1% into the economy.

(d) provide more mortgage funds through banks for commercial loans.

(e) make housing more affordable.

None of the above suggestions are asking for a free lunch.

“Mortgages are the most common and significant type of debt held by Canadians. Overall, about 40% of Canadians have a mortgage; the median amount owing is $200,000. Most Canadians will hold a mortgage at some point in their lives. For example, almost 9 in 10 Canadian homeowners aged 25 to 44 (88%) have one.” Source – https://www.canada.ca/en/financial-consumer-agency/programs/research/canadian-financial-capability-survey-2019.html

Using $200,000 as the median and 40% of Canadians representing about 15,000,000, means that there is about $3 trillion dollars owing in mortgages in Canada.

At 2%, and a 25 year amortization (current maximum allowed), there is over $12.715 billion a month being paid to service that debt.

Drop it to 1% with a 35 year amortization, and the payments would drop to $8.468 billion.

In other words, in that scenario, over $4 billion/month ($50 billion/year) would be injected into the Canadian economy.

Is the Canadian government (we the people) capable of lending itself $3 trillion of debt on well secured real estate?

I’m going to suggest we are good for it…because we are obviously good for the current system at twice the interest rate. “Print” the money, pay off the existing “mortgages” and get with the program.

Think all of this is impossible? Ask Norway how they are doing it with zero interest rate mortgages….https://nordiccreditrating.com/uploads/2020-05/NCR_-_Norwegian_savings_banks_in_a_zero_interest_rate_environment__0.pdf

It is time to make money on deposit in banks do something…in other words, time to end the interest, “free lunch” which everyone has been enjoying for the past hundred plus years. Put the money to work to create Canadian jobs and expand our entrepreneurship.

Just sayin’…if I was Minister of Housing…